Litigation & Dispute Resolution Update

This article was prepared by lawyers from the London office of Mayer, Brown, Rowe & Maw

HUMAN RIGHTS

The following two cases show the impact on civil litigation of the European Convention on Human Rights. In the first case the Court held that withdrawal of a legal aid certificate could be a breach of Article 6 ECHR (right to a fair trial) and in the other the Court held that the length of time proceedings had taken was also a breach of Article 6.

R v Legal Services Commission ex parte Alliss, QBD Administrative Court (Jackson J) 25 September 2002

This was an application for judicial review of a decision by the Legal Services Commission ("LSC") to withdraw the claimant’s legal aid certificate on the grounds that the withdrawal of legal aid was a breach of the claimant’s right to a fair trial (Article 6(1) of the European Convention on Human Rights); that the decision to discharge the legal aid certificate was both unreasonable and inconsistent with earlier decisions; and it was flawed due to procedural irregularities.

There had been a long running dispute between the claimant’s family and a neighbouring family which culminated in the claimant ("X") commencing civil proceedings against the neighbour ("Y") for unlawful killing. X and Y were legally aided and the Legal Aid Board (the predecessor of the LSC) granted Y legal aid to instruct counsel. Shortly before the trial in November 2001, the LSC invited X to show cause as to why his certificate should not be discharged. The Funding Review Committee decided that the certificate should remain in place. The trial was adjourned until November 2002. The LSC subsequently sought the advice of leading counsel in respect of the certificate remaining in place and ultimately decided to discharge it. X appealed but the appeal was dismissed. Y’s legal aid certificate remained in place and it provided for representation by counsel.

X’s application was allowed. The Court held inter alia that withdrawing the legal aid certificate when X stood at the door of the Court, so that he would have to act in person against adefendant represented by counsel in a case which involved complex issues of fact and law, amounted to a breach of X’s right to a fair trial. This denied him effective access to court and breached Article 6 (1) of the European Convention on Human Rights.¹

Lawtel, Butterworths

Somjee v United Kingdom (App No 42116/98) ECHR 15 October 2002

The applicant first issued proceedings in 1988 in the employment tribunal, alleging racial discrimination by the regional health authority. Further sets of proceedings, alleging victimisation and unfair dismissal, were launched in August 1989. Matters were not finally dealt with until May 1998. The applicant submitted that pursuant to Article 6(1) European Convention on Human Rights the length of the proceedings had exceeded a reasonable time and she sought satisfaction for non-pecuniary loss.

The Court ruled that the reasonableness of the length of proceedings is to be assessed in the light of the circumstances of each case but regard must be given to the criteria laid down in case law: (1) the complexity of the case; (2) the conduct of the parties; (3)what is at stake for the applicant. In this case, although the applicant was to blame for some of the delays in the proceedings, delays caused by the judicial authorities had significantly contributed to the overall length of the proceedings which exceeded a reasonable length. This violated Article 6(1) of the Convention. The applicant had suffered non-pecuniary loss and was awarded damages.

In this case, there was an arbitration decision in favour of the claimant on preliminary points regarding jurisdiction and the entitlement of the claimant to bring the action. The defendant applied under s 67 Arbitration Act 1996 2 to set aside the decision. The parties agreed that an application under s 67 constituted a re-hearing rather than a review. The issue before the Court was whether the evidence on the re-hearing was confined to the evidence that had already been adduced before the arbitrator.

The Court held that there is no requirement that evidence on a re-hearing under s 67 of the Act be confined to the evidence previously adduced before the arbitrator. It was noted that evidence that is introduced late might be viewed with some scepticism and the Court has the power to address such matters when dealing with costs.

ADR

Stay of proceedings

Cable & Wireless plc v IBM United Kingdom Ltd, QBD Commercial Court, (Colman J) 11 October 2002

The claimant applied for summary judgment on the construction of a clause in an IT outsourcing contract. The defendant cross-applied to the Court for an order that the claim should be stayed pending the dispute being referred to ADR pursuant to provisions in the contract which it asserted required this. The Judge noted that the application for a stay raised "…an issue of great importance…as to the effect, if any, which should be given by the courts to agreements to refer disputes to ADR."

The parties entered into an agreement ("the Agreement"). A dispute arose and proceedings were commenced by C&W for a declaration as to the meaning of a provision of the Agreement. The claimant applied for summary judgment in relation to that provision and the defendant cross-applied for a stay of the proceedings on the basis of clause 41.2 of the Agreement ("the ADR clause") which provided that "If the matter is not resolved through negotiation, the Parties shall attempt in good faith to resolve the dispute or claim through an Alternative Dispute Resolution (ADR) procedure as recommended to the Parties by the Centre for Dispute Resolution. However, an ADR procedure which is being followed shall not prevent any Party or Local Party from issuing proceedings." The parties did not succeed in resolving the dispute through negotiation. IBM wanted the Court to stay the proceedings while the parties complied with the ADR clause. Counsel for C&W submitted that (1) the clause was unenforceable because it lacked certainty. It imposed an agreement to negotiate which, based upon earlier authorities (Steyn J in Paul Smith Ltd v H&S International Holdings Inc, Courtney & Fairbarn Ltd v Tolaini Brothers (Hotels) Ltd³ ), is not enforceable in English law; (2) the last sentence of the clause contemplated the issue of proceedings therefore it could not have been the mutual intention that the reference to ADR should have binding effect.

The Judge found that when the parties negotiated the agreement it was the mutual intention that litigation was to be a last resort in the event that negotiation and ADR were unproductive. That was not qualified in any way by the last sentence of the ADR clause. The "mere issue of proceedings" was not inconsistent with the simultaneous conduct of an ADR procedure or with a mutual intention to have the issue finally decided by the courts only in the event that ADR was unsuccessful.

The Judge had to determine whether the reference to ADR was nothing more than an agreement to negotiate and, as such, incapable of enforcement in English Law. He found that:

(1) The wording of the ADR clause was more than an agreement to attempt in good faith to negotiate a settlement. The clause went so far as to identify the use of the CEDR ADR procedure. In Courtney & Fairbairn Ltd it was held that "an agreement to negotiate cannot be enforced in English Law because…it is too uncertain to have any binding force". There is also lack of certainty in an agreement to strive to settle a dispute amicably.⁴ Had the wording in the ADR clause provided that the parties "attempt in good faith to resolve the claim" it would have been unenforceable. In fact, it prescribed the means for attempting to find a resolution which provided sufficient certainty for a court to ascertain whether they had been complied with.

(2) CPR rule 1.4 provides that "(1) The court must further the overriding objective by actively managing cases" which includes encouraging parties to use ADR where appropriate. ADR is now "…a firmly established, significant and growing facet of English procedure" and for the courts to decline to enforce contractual references to ADR on the grounds of uncertainty would be contrary to public policy. It was held that there was a sufficiently defined mutual obligation on the parties to initiate a mediation, select a mediator and present the mediator with its case.

Colman J added that contractual references to ADR which did not include provision for an identifiable procedure would not necessarily fail to be enforceable by reason of uncertainty. Where there is an unqualified reference to ADR, a "sufficiently certain and definable minimum duty of participation should not be hard to find." As regards enforcing the obligation, Colman J held that the reference to ADR was analogous to an agreement to arbitrate and that, as such, it was capable of being enforced by a stay of the proceedings or by injunction absent any pending proceedings.⁵ The remedy is discretionary in nature and the Court must consider relevant factors when exercising its discretion. In this case the appropriate course was for the hearing of the claim for declaratory relief to be adjourned until after the parties referred all outstanding disputes to ADR.

SETTLEMENT AGREEMENTS

Effect on agreement of refusal of draft Tomlin order

Thakrar v Ciro Citterio Menswear plc (in administration) & Others, ChD (Sir Andrew Morritt V-C) 1 October 2002

This was an application by the claimant ("T") for a declaration that the defendant company ("the Company") was bound by the terms of a settlement agreement contained in a draft Tomlin Order that had been signed by the solicitors of both parties following a successful mediation.

Most of the proceedings and claims to which the agreement was intended to apply were due to be considered by the Court of Appeal, a few days after the draft Tomlin order was signed. When the parties appeared before the Court of Appeal, their application for an order in the form of the draft Tomlin order was refused on the grounds that it might not have been an appropriate compromise to have been made by the administrators of the Company and that a decision of the insolvency courts should not be pre-empted.⁶ With no settlement approved, the Court then considered a number of other applications, most of which were decided in the Company’s favour. It is noteworthy that the Court was not provided with any details of the mediation and that the hearing was attended by counsel for the parties who had not been previously engaged.

The Company was no longer prepared to be bound by the mediation agreement and it was not prepared to settle on the same terms because the judgment of the Court had substantially altered the negotiating strengths of the parties. T issued Part 8 proceedings to establish (1) whether the draft

Tomlin order contained an enforceable agreement for settling the claims which was not conditional on the making of the order; (2) what, if any relief, a judge at first instance could properly grant in light of the Court of Appeal’s refusal to make the Tomlin order sought and the existence of pending appeals.

The Court held that (1) the purpose of a Tomlin order is to enable the enforcement of the terms of settlement of an existing action by summary process in that action. The contract of settlement is capable of being distinct from the Tomlin order or any agreement to procure it. In this case, the agreement contained in the schedule to the draft Tomlin order was intended to operate as a free-standing agreement and was not conditional on the making of the order; (2) at the time the compromise agreement was concluded there was no appeal against the order of the Judge⁷ and the time for an appeal had expired. The order of a deputy judge of the High Court was valid and effective unless/until it was set aside; (3) the compromise arising from the mediation was one which the Court "can and should" uphold. The compromise agreement was therefore enforceable and unconditional and the administrators were directed to discontinue the appeals pending in the Court of Appeal to the extent necessary to give effect to the terms of the compromise.⁸

JUDICIAL BIAS

Apparent bias/Recusal of a judge

Sengupta v Holmes & Others (the Lord Chancellor intervening), CA (Laws LJ, Jonathan Parker LJ, Keene LJ) 31 July 2002

The applicant was refused permission (on the papers) by Laws LJ to appeal against a decision that a complaint against him should proceed to the General Medical Council. He renewed his application for permission to appeal at an oral hearing before two Lords Justice and permission was granted. The substantive appeal came on for hearing before a court which included Laws LJ as one of its members. Counsel for the applicant submitted that as Laws LJ had refused permission to appeal he should recuse himself on the ground of apparent bias. The Court had to consider, inter alia, the appropriate test for apparent bias by a judge.

Laws LJ considered the provisions for permission to appeal (which are contained in CPR rule 52.3) and the relevant authorities which deal with issues of bias or apparent bias.⁹ Neither the rules nor the associated practice direction stipulate whether or not a judge who had previously considered an application for permission to appeal might sit as a member of the court hearing the substantive appeal in a case where permission to appeal was subsequently granted.

As regards the general test for bias, in Re Medicaments Lord Phillips MR said that "The court must first ascertain all the circumstances which have a bearing on the suggestion that the judge was biased. It must then ask whether those circumstances would lead a fair-minded and informed observer to conclude that there was a real possibility, or a real danger, the two being the same, that the tribunal was biased." This test was approved by the House of Lords in Magill v Porter.

Counsel for the applicant accepted that a "fully informed bystander would entertain no apprehension of bias…" A fully informed bystander would include a lawyer who was accustomed to practising in the higher courts and had experience with applications for permission to appeal and a legal journalist with experience in the Royal Courts of Justice. However, counsel submitted that the "fair-minded and informed observer" cannot be equated with a practising lawyer. In her view, a test for apparent bias that rested on the views of practising lawyers, would not "deliver public confidence in the judicial system". The observer/bystander could be taken to have some knowledge of legal culture.

The application for recusal was refused. Laws LJ said that there will be some circumstances where a fear of apparent bias would be reasonable. For example, if a judge presided at a first instance trial and concluded on the facts after hearing disputed evidence, that one of the parties lacked merit, it would be "unthinkable" that the same judge should sit on the party’s appeal because "he might not conscientiously be able to put himself back into a state of mind where he has no preconceptions about the merits of the case". But, ordinarily, (as in the instant case) the circumstance will be that the judge has not had to resolve the case’s factual merits. Instead, he concluded on the material before him that the lower court was correct and he reached his conclusion knowing that the applicant may apply for an oral hearing. In this circumstance, there is no reasonable basis for concluding that the same judge will not be open minded if he is a member of the Court that deals with the substantive appeal.

The Court found that "Absent special circumstances a readiness to change one’s mind upon some issue, whether upon new information or simply on further reflection, and to change it from a previously declared position, was a capacity possessed by anyone prepared and able to engage with the issue on a reasonable and intelligent basis. The fair-minded and informed observer had surely to have those matters in mind." The fair-minded and informed observer would also be aware that oral argument has a central place in the English common law adversarial system and that the ability of a judge to change his mind after hearing oral argument was at the centre of the system. If this knowledge was not attributed to the fair-minded observer, then the test for apparent bias would be too distant from reality.

Hart & Another v Relentless Records Ltd & Others, ChD (Jacob J) 4 October 2002

This was an application for the judge to recuse himself on the grounds of apparent bias in respect of six incidents. (There was also an application for summary judgment on a counterclaim for trade mark infringement.) The incidents included (1) the judge’s observation that the defendants were in a position to apply for security for costs; (2) the judge’s suggestion after the trial had commenced that there should be settlement discussions; (3) the calling of counsel into the judge’s corridor for an informal meeting; (4) allowing inadequate time for the company to respond to the security application; (5) the allegation that the judge said that evidence of friends would not be considered;¹⁰ (6) failure to consider clear documentary evidence that ran contrary to findings in the judgment.

The Judge cited a number of the same cases as were cited in Sengupta. He held that the matter had to be considered from the perspective of a fair-minded and informed observer sitting at the back of the Court witnessing proceedings. The test is "…whether the fair-minded and informed observer, having considered the facts, would conclude that there was a real possibility that the tribunal was biased" (per Lord Hope in Porter v Magill). The observer was to be taken to be someone who understood the underlying facts relating to the incidents said to require recusal, including any relevant substantive and procedural rules.

The application was dismissed. In the circumstances of this case, the incidents relied upon did not amount to apparent bias. The Judge also found that informal meetings with counsel, such as there had been in this case, did not amount to a breach of Article 6 of the European Convention on Human Rights (the right to a fair and public hearing).

PROFESSIONAL NEGLIGENCE

Scope of solicitor’s duty to clients

Dawson Cornwell & Co (A Firm) v CJ Nicholl & Associates Ltd & Another, QBD (Gross J) 17 September 2002

The claimant solicitors issued proceedings for recovery of unpaid legal fees and the defendants counterclaimed in negligence. The allegation was that the claimant had been negligent in failing to take proper account of the risk of inconsistencies materialising in the evidence.

The second defendant provided some information to a firm of solicitors (P) that was acting on its behalf in proceedings. Subsequently, the defendants became dissatisfied with P and retained the claimant solicitors. Proceedings were issued against P on the basis of instructions given by the second defendant to the claimant. The claimant was not aware that the second defendant had given contradictory information to P whilst they were retained. In the course of being cross examined, the second defendant admitted the information that it had given to P. In light of that admission, the claimant took the view that the case had been undermined and advised the defendants to settle. The action was compromised for a sum which was far lower than that which the claimant had expected the defendants to recover, the expectation having been based on the original instructions that had been received. Proceedings were subsequently issued for unpaid legal fees and the defendants counterclaimed in negligence.

The Court held that (1) a solicitor is required to exercise reasonable care and skill and the standard is that of the reasonably competent practitioner; (2) the burden of proof rests on a claimant to prove a breach of duty and the causative consequences which flow from the breach. The standard of proof is the balance of probabilities; (3) an allegation of professional negligence is serious and hindsight is to be excluded. An error or judgment might but need not amount to professional negligence; (4) in general, a solicitor cannot be criticised where he acted on the advice of counsel, properly instructed. The solicitor may not rely blindly on counsel’s advice or abdicate his own professional responsibility. The solicitor was under a duty to reject counsel’s advice if it was obviously wrong; (5) generally, a solicitor is entitled and bound to act on his client’s instructions. Subject to the solicitor giving adequate advice, it is generally a defence to a charge of professional negligence that the solicitor was acting on his client’s instructions.

The Court found the second defendant’s case unconvincing, in part because it sidestepped the defendant’s responsibility for the emergence of the inconsistency at the trial. For the defendants’ action to succeed, it would impose a duty on the claimant to have read the relevant materials and to have cross examined his client on them. It would be wrong to proceed on the basis that the claimant was under a duty to cross examine his client because nothing in the general run of a solicitor’s duties went that far. "There was something deeply unattractive in a claim for professional negligence being brought by a client, based on the alleged fault of his legal representatives in believing his own inaccurate account of events." Accordingly, the counterclaim was dismissed.

The assessment of damages in professional negligence actions

Primavera v Allied Dunbar Assurance plc, (CA) (Simon Brown LJ V-P, Mance LJ, Latham LJ) 4 October 2002

This case was concerned with the assessment of damages in professional negligence actions. It raised issues of mitigation, double recovery, and the applicability of pre-trial Part 36 offers to appeals. It also appears to have confirmed that refusal to go to mediation if the Court of Appeal recommends that the parties do so, is likely to lead to an adverse costs order.¹¹

The claimant owned a restaurant and wanted to develop a second restaurant for which he needed a loan. On the advice of an agent of the defendant ("ADA"), he took out a loan of £500,000 in 1987 and linked it to an executive retirement plan ("ERP") with ADA which was designed to produce a tax free lump sum of £500,000 for the repayment of the loan. ADA’s agent withheld the information that in order to be able to take the tax free lump sum, the claimant needed to receive Schedule E earnings of not less than £334,000 per annum for three consecutive years. The trial judge found that ADA was negligent in not giving this advice to the claimant.

In March 1995, when the claimant tried to take the tax free lump sum, he found out that for want of the qualifying income, the lump sum available was only £125,875. The agent then told the claimant that a delay in finalising his ERP had caused it to be caught by the March 1987 Budget changes which would have limited the tax free lump sum to £150,000 in any event. The Judge found that this also had been intentionally withheld from the claimant (and in any case, it was later found to have been incorrect advice).

The fund was continued from 1995 to November 2000 during which time the claimant made up the requisite schedule E earnings. He was able to take the £500,000 lump sum in November 2000 but chose not to. In March 1995 the ERP had a value of £792,895.67. In November 2000 it was worth £1,451,760.91. The growth in the ERP during that period exceeded any loss that the claimant suffered by being unable to take the £500,000 lump sum in March 1995.

The Judge awarded the claimant damages of £101,000 which was the reduced value of the pension fund in 1995 plus £140,000 which was the cost of servicing the still outstanding loan from 1995 to 2000.¹² ADA appealed the assessment of damages on the grounds that (1) the award of £101,000 and £140,000 involved double counting; (2) the claimant had mitigated his loss and, in fact, the gain in the value of the pension fund exceeded any loss that he had suffered.

(1) Double counting: Allowing the recovery of both the £101,000 and £140,000 was double counting. If it was correct to compensate the claimant on the basis of his loss as at 1995, £101,000 was the full sum by which the fund was diminished in value by reason of the inability to take the £500,000 lump sum. The claimant was not entitled to recover the £140,000 in respect of subsequent interest payments because he could not "…at the same time recover for future loss on some other basis arising out of the very same shortfall" (per Simon Brown LJ).¹³

(2) Date that the loss fell to be assessed/mitigation: ADA submitted that it would be wrong to compensate the claimant as if he had crystallised his loss in 1995 when he had not. Because the fund was left intact, by November 2000 the claimant’s position had improved beyond what it would have been if the fund had been utilised as was intended in 1995. ADA argued that the increased value of the fund was a consequence of the claimant remedying ADA’s negligence which meant that the benefit was caused by the negligence and the loss was extinguished.¹⁴

Simon Brown LJ held that the steps taken by the claimant after 1995 "were not properly to be regarded as steps reasonably taken in mitigation of his loss. Rather…the choice of how to deal with the situation which confronted him in 1995 as a result of the appellants’ negligence was his and the speculation from that point on was on his own account." Mance LJ agreed that the claimant was speculating on his own account. Latham LJ said that as a result of the claimant’s own efforts he used the assets to his bestadvantage. Had his investment decision proved disadvantageous, he would not have had a claim against the defendants for any loss that might have arisen.

The claimant was therefore entitled to £101,000 together with interest from 1995 plus the costs incurred of his solicitors clarifying his rights with the Inland Revenue.

(3) Costs: The Court rejected the defendant’s submission that a pre-trial Part 36 offer was still open for acceptance after judgment at trial. It was noted that the defendant refused to go to mediation of the appeal although that had been specifically recommended when permission to appeal was granted.¹⁵

The claimant was awarded 75% of its costs of the appeal (this took account of the fact that the claimant lost on one issue which reduced the amount of the judgment).

CONTRACT

Effect of using a company’s trading name on a bond

OTV Birwelco Ltd v Technical and General Guarantee Company Ltd, TCC (Judge Anthony Thornton QC) 20 September 2002

The questions in this case were (1) where they are different, does the use of a company’s trading name rather than its registered name in the wording of a bond infringe the requirements of s 36 A Companies Act 1985 (the Execution of documents: England and Wales); and (2) does the use of the trading name on the company’s seal on the bond, in breach of s 350 of the Act, of itself render the bond illegal, a nullity or unenforceable?

As a result of a management takeover the business of Woodbank UK Ltd was carried on by Woodbank UK (Mechanical and Electrical) Ltd. Woodbank submitted tender documents for a sub-contract (which referred to both names) and it was awarded the tender. The claimant was told that Woodbank would be trading under Woodbank UK Ltd. Woodbank was required to provide a bond to indemnify the claimant in the case of any default in the performance of the sub-contract. It applied to the defendant for a bond in the name of Woodbank UK Ltd. The bond was sealed by the defendant and by Woodbank with the name Woodbank UK Ltd. Woodbank then ceased trading, which resulted in extra expenditure for the claimant in completing the sub-contract works. The claimant brought proceedings against the

defendant to enforce its rights under the bond. The defendant submitted that the bond was unenforceable or was a nullity (1) due to non-compliance with therequirements of s 36A Companies Act 1985; and (2) because the seal that was used on the bond was not engraved with the registered name of the company, as required by s 350 of the Act.¹⁶ .

The Court held that it was permissible to consider all available evidence when deciding whether the bond could be read as if Woodbank UK (Mechanical & Electrical) Ltd was the company with whom the defendant contracted. S 36A Companies Act 1985 does not require that the name used inthe body of the bond should be its registered name. Therefore, the bond should be read as if the sub-contractor was Woodbank (Mechanical & Electrical) Ltd trading asWoodbank UK Ltd. The failure of Woodbank to comply with the requirements of s 350 of the Act did not render the bond illegal, a nullity or unenforceable because (1) of issues of proportionality and the loss that might ensue; (2) the defendant would be unjustly enriched; (3) no-one wasmisled by the mistake; (4) the only party to suffer loss would be the claimant company and it was not party to the bond. Accordingly, judgment was entered for the claimant.

Rescission of a contract on the ground of common mistake

Great Peace Shipping Ltd v Tsavliris Salvage (International) Ltd, CA (Phillips MR, May LJ, Laws LJ) 14 October 2002

This was an appeal by the defendant against the order of Toulson J giving judgment for the claimant on its claim for moneys payable by the defendant under a contract for hire of the claimant’s ship or damages for wrongful repudiation of the contract. The defendant submitted that as the purported contract between the parties was concluded by reason of a fundamental mistake of fact (that two vessels were in close proximity to one another when they were not) the contract was either void in law or voidable and it was entitled to relief in equity by way of rescission of the contract.

The defendant contracted to hire the claimant’s vessel to escort and stand by a damaged ship. There was a cancellation fee of five day’s hire. Both of the parties thought that the vessels were near to one another. When they discovered that they were not and a closer vessel agreed to assist, the defendant repudiated the contract and refused to make any payment for the hire of the claimant’s vessel.

The common law doctrine of mistake of contract was explained in Bell v Lever Brothers.¹⁷ Lord Atkin formulated the principle that at common law, a mistake as to the quality of something that had been contracted for will not void a contract unless the mistake is mutual "...and is to the existence of some quality which makes the thing without the quality essentially different from the thing that it was believed to be."

The defendant relied on the position in equity and specifically on the case of Solle v Butcher¹⁸ in which Lord Denning held that "A contract is also liable in equity to be set aside if the parties were under a common misapprehension either as to the facts or as to their relative and respective rights, provided that the misapprehension was fundamental and that the party seeking to set it aside was not himself at fault." Toulson J concluded that Lord Denning’s view of the Court’s jurisdiction was over-broad (ie wrong) - equity did not give a party the right to rescind a contract on the ground of common mistake nor did it give the Court discretion to set aside a contract on such a ground.

The appeal was dismissed. The Court held that if a contract was valid and enforceable on the ordinary principles of contract law, there was no jurisdiction to grant rescission of the contract in equity on the ground of common mistake. In this case there was a common assumption that the vessels were close enough to enable the claimant to carry out thesalvage service that it was engaged to perform. The defendant did not want to cancel the agreement until it knew it could get assistance from another vessel which was a "telling indication that the fact that the vessels were considerably further apart than had been believed did not mean that the services which the [claimant] was in a position to provide were essentially different from those which the parties had envisaged when the contract had been concluded, or that it was impossible to perform the contract."

COSTS

Estimate of costs

Long Eaton Plant Hire Ltd v Nelsons (A Firm), Supreme Court Costs Office, (Costs Judge Campbell) 28 August 2002

This case is a reminder of the importance of reviewing costs estimates when costs approach the upper limit and the matter is still ongoing.

The claimant challenged the defendant’s bill of costs which was over £20,000. It submitted that (1) the defendant should be held to its costs estimate of £6,000 which had been given six months prior to judgment being obtained; (2) pursuant to rule 15 of the Solicitor’s Practice Rules and the Solicitors’ Costs Information and Client Care Code,¹⁹ the defendant should have revised its estimate when costs were nearing the upper limit.

The claimant was successful. The Judge held that the estimate should have been revised as soon as the costs started to spiral and before extra costs were incurred, particularly as, in this case, many of the costs were associated with drafting of witness statements, as opposed to something like urgent injunctions, and there was, therefore, enough time to provide an updated estimate. Accordingly, the claimant would not be required to pay more than it would have paid had the estimate remained accurate.

Indemnity costs

Somatra Ltd v Sinclair Roche & Temperley and Sinclair Roche & Temperley v Somatra Ltd & Others, QBD Commercial Court (Morison J) 15 October 2002

The claimant brought an action against the defendant for professional negligence and the defendant counterclaimed for unpaid fees. Judgment was given for the claimant.²⁰ The claimant submitted that it was entitled to indemnity costs because of the way that the defendant had conducted the defence, ridiculing the claimant and accusing it of dishonesty and improper conduct.

The Court held that the defendant’s method of fighting the case was unreasonable and uncalled for. An order for indemnity costs was appropriate.²¹

MISUSE OF THE SLIP RULE

Markos v Goodfellow & Others, CA (Pill LJ, Waller LJ) 11 October 2002

CPR rule 40.12 provides for the correction of errors in judgments and orders. ("(1) The court may at any time correct an accidental slip or omission in a judgment or order.") Essentially its purpose is to do no more than correct typographical errors. ²² It is limited to genuine slips and "…cannot be used to correct an error of substance nor in an attempt to get the court to add to its original order…However, the court has an inherent jurisdiction to vary its own orders to make the meaning and intention of the court clear and can use the slip rule to amend an order to give effect to the intention of the court."

In the instant case, a district judge had dismissed the claimant’s claim in a boundary dispute and the claimant applied for permission to appeal. The High Court judge found that the appeal had no prospect of succeeding against the district judge’s finding of fact. He also found that the district judge was wrong not to have awarded nominal damages and not to have made a declaration in respect of the boundary. The defendant undertook to correct the district judge’s order on these points under the slip rule and, on that basis, the claimant was refused permission to appeal. The claimant sought permission to appeal against that decision on the ground that the High Court judge exceeded his jurisdiction when he varied the order of the district judge.

The appeal was allowed. The Court of Appeal found that while the High Court judge had purported to refuse permission to appeal in fact he had granted permission and heard the appeal. He had misused the slip rule (which was limited to a genuine slip and was not designed to correct a substantive issue). The matter was remitted to the High Court for the claimant to seek permission to appeal the judgment of the district judge.

JUDICIAL REVIEW

R (on the application of Opoku) v Principal of Southwark College & Another, QBD Administrative

Court (Lightman J) 17 October 2002

The claimant brought proceedings for judicial review of the decision of the Principal of Southwark College to exclude him from the College and the decision of the Governors of the College (the second defendant) who dismissed his appeal against that decision. The Court gave the claimant permission to apply for judicial review on a single ground under Article 6 European Convention on Human Rights but it refused permission to proceed on the ground of procedural unfairness. The High Court dismissed the claimant’s application and the claimant then applied for permission to challenge the decision of the second defendant on the ground of procedural unfairness although permission had already been refused on paper and at the renewed application and the claimant had not appealed against the refusals. Issues arose as to (1) whether the High Court had jurisdiction to grant permission on the issue where permission had been refused on paper and at a hearing and there had been no appeal to the Court of Appeal; and (2) if the Court had jurisdiction, what approach should it adopt and what principles if any should it apply when deciding whether to grant permission.

There is no specific limitation imposed by the CPR on the power of the High Court to grant permission to apply for judicial review where permission had previously been refused. However, an appeal to the Court of Appeal rather than a fresh application is appropriate where there had been a challenge as to the correctness of the refusal. A fresh application must be based on fresh material or it may constitute an abuse of process. Decisions refusing permission were interlocutory judgments and, as such, they did not trigger the common law doctrine of res judicata.

It should be read into the rules that there is no limitation on the jurisdiction of the High Court to grant permission on a fresh application. The principles that govern the exercise of the discretionary jurisdiction should reflect the need forcaution and for "respect for the legitimate expectations of previously successful defendants". The Court should give proper respect to the provision of CPR rule 52.15 ("(1)Where permission to apply for judicial review has been refused at a hearing in the High Court, the person seeking that permission may apply to the Court of Appeal for permission to appeal") and should only exercise its discretion to grant permission where the claimant establishes that there has been a significant change of circumstances, new facts have come to light which could not reasonably have been known or found out at the time of the previous application, or a proposition of law not previously open to the claimant had become maintainable. Otherwise, permission should be refused as an abuse of process. The claimant’s application was refused because it did not comply with the above and it was totally lacking in merit.

BREACH OF CONFIDENCE

Campbell v Mirror Group Newspapers Ltd, CA (Lord Phillips MR, Chadwick LJ, Keene LJ) 14

October 2002

The Court of Appeal allowed the appeal of the Mirror Group Newspapers Ltd ("MGN") from the decision of Morland J that it was liable in breach of confidence to the claimant ("NC"), an internationally famous model.

NC averred falsely in an interview that she did not take drugs. MGN published an article disclosing that NC was a drug addict and it published a picture of her leaving a Narcotics Anonymous meeting. The purpose of the article was to show that NC had deceived the public. NC conceded that the publications were, to a large extent, justified as being in the public interest. However, she complained that by obtaining and publishing information related to her treatment at Narcotics Anonymous, MGN acted in breach of confidence. MGN submitted that publication was justified in the public interest to correct NC’s deceptions. Morland J awarded NC damages for breach of confidence and compensation under s 13 Data Protection Act 1998.²³ MGN appealed.

The fact that an individual achieved public prominence did not mean that his private life could be exposed by the media. The courts are in the process of identifying the principles by which the law of confidentiality has to accommodate the Convention rights to respect for private and family life and freedom of expression in Articles 8 and 10, Schedule 1 Human Rights Act 1998. One principle that is recognised is that where a public figure chooses to lie about his or her private life (as in the instant case), the press would normally be entitled to set the record straight.

In allowing the appeal, their Lordships held that (1)the publication of the fact that NC was attending a Narcotics Anonymous meeting was not, in its context, sufficiently significant to amount to a breach of the duty of confidence owed to her. MGN was justified in publishing the informationin order to provide a factual account of NC’s drug addiction that was detailed enough to be credible. If the publication of confidential information was justifiable in the public interest, the journalist had to be given reasonable latitude as to the manner in which the information was conveyed to the public so that his right to freedom of expression would not be unnecessarily inhibited; (2) MGN was entitled to invokes 32 Data Protection Act 1998²⁴ in answer to the claim for compensation for contravention of s 13 of the Act. The conditions of exemption were satisfied in the present circumstances and the Act was not infringed.

CIVIL LIABILITY (CONTRIBUTION) ACT 1978

Cooperative Retail Services Ltd v Taylor Young Partnership Ltd & Another and Carillion Construction Ltd (First Third Party) & Other parties, HL (Lords Bingham, Mackay, Steyn, Hope and Rodger) 25 April 2002

The House of Lords has handed down its decision in this case which concerned the entitlement of the claimants to maintain a claim, pursuant to s 1 Civil Liability (Contributions) Act 1978 (Entitlement to Contribution), against the third parties in respect of losses suffered as the result of a fire at a construction site. Their Lordships upheld the decisions of the lower court and the Court of Appeal. In a situation where, under a construction contract, an employer insures liability for damage to the project in the joint names of all contractors and subcontractors, no contribution can be claimed from any of them, either directly or by subrogation, for insured losses.²⁵

The Court Service has published a consultation paper on Civil Court Fees which are set to rise on 14 February 2003. The aim is for court users to cover the cost of running the courts while at the same time ensuring access to justice for litigants of modest means.

The proposed increases would increase Supreme Court fee income by approximately 5% and county court civil and family incomes by 8%. Insolvency fee income would rise byapproximately 11%.

The larger claims will bear the brunt of the increases. For example, a claim in the High Court over £150,000 will attract a commencement fee of £800 (an increase of £300). Fees on allocation will increase from £80 to £120 and on listing from £400 to £600.

A copy of the consultation paper is available on www.courtservice.gov.uk/fandl/fee_consultation.pdf.

^{1 Article 6(1) says that "In the determination of his civil rights and obligations or of any criminal charge against him, everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law."}

^{2 S 67 of the Act provides that “(1) A party to arbitral proceedings may apply to the court – (a) challenging any award of the arbitral tribunal as to its substantive jurisdiction; (2) On an application under this section challenging an award of the arbitral tribunal as to its substantive jurisdiction, the court may by order – (a) confirm the award or (b) vary the award, or (c) set aside the award in whole or in part.”}

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