Welcome to the Commercial Dispute Resolution Update for September 2010.
If you require the full text of any of the cases referred to or further information about any of the items referred to, or if you have been forwarded this update by a colleague and would like to receive it direct, please contact Fran Mussellwhite.
All links are correct at the date of publication. The following topics are covered:
Judicial Review
R (on the application of Grimsby Institute of Further & Higher Education) v Chief Executive of Skills Funding (formerly Learning & Skills Council) (2010)
The claimant institute of further education applied for judicial review of the decision of the Learning & Skills Council due to lack of funds not to grant Approval in Detail (AiD) to fund a building scheme which had already been granted Approval in Principle. The court held that (1) save in an exceptional case, a legitimate expectation founded on a representation required that representation to be clear and unambiguous and (2) a legitimate expectation founded on past practice required there to have been a specific undertaking to an individual group whereby its continuance was assured. The court found that while the LSC had been positive and encouraging about the project, this did not amount to an implied representation that AiD would be granted. The application for judicial review was refused.
R (on the application of Rex C) v Upper Tribunal and others (2010)
The Court of Appeal held that decisions of the Upper Tribunal are subject to judicial review on the grounds of outright excess of jurisdiction or denial of procedural justice only.
Disclosure
Quinn Direct Insurance Ltd v Law Society of England & Wales (2010)
The Court of Appeal has held that insurers of solicitors are not entitled to disclosure of privileged information unless privilege is waived by the client. This point arose in the circumstances of an intervention by the Solicitors Regulation Authority and the decision raises potential issues for solicitors in complying with their duties to disclose confidential information to insurers when renewing their policies.
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Public Procurement (Disclosure)
Croft House Care Ltd and others v Durham County Council (2010)
In proceedings under the Public Contracts Regulations 2006 and EU law principles the local authority sought to withhold from disclosure two categories of documentation: documents containing information which would prejudice its ability to re-run the procurement fairly were that to become necessary and documents provided by bidders in their pre-qualification questionnaires which contained confidential information relating to the operation of their business. The court held that the fact that documents might contain confidential information was not in itself a reason for not disclosing them and the issue of confidentiality had to be balanced with the need for the claims to be disposed of fairly. Additionally, the local authority had not been able to show that the disclosure of this information would mean that there would be no practical way of carrying out a fair procurement process in the future. The court ordered that the documents concerned should be disclosed to the claimants with some information redacted.
Costs and Professional Conduct
Ghadami and Ghadami v Lyon Cole Insurance Group (2010)
The Court of Appeal held that where the defendant’s legal costs were covered by professional indemnity insurance subject to an excess the deputy judge at first instance had erred in assessing that the claimant’s liability was limited to paying the excess of the insurance policy rather than the full legal costs reasonably incurred. The deputy judge’s decision was based on the failure by the defendant’s solicitors to provide a client care letter and agree rates. The Court of Appeal however held that their failure to comply with the Solicitors’ Code of Conduct did not preclude them from recovering fees because there was an implicit agreement between them and the defendant that they would act as legal advisers in these proceedings and charge reasonable costs for the work done. On the other hand, there was no express agreement between the defendant and its solicitors limiting the defendant’s liability for costs to the insurance policy excess.
Insolvency
Leyland Printing Company Ltd v Leyprint Ltd (2010)
This case related to two companies which had been in administration since May 2002. It was held by the High Court that time does not stop to run for the purposes of the Limitation Act 1980 when a company goes into administration and so the creditors’ claims were statute-barred. This is distinct from the situation where a company goes into liquidation whereby time does cease to run for the purposes of limitation at the date of the commencement of the winding up.
BNY Corporate Trustee Services Ltd v Eurosail-UK 2007-3BL plc and others (2010)
The High Court set out its interpretation of the “balance sheet test”, which establishes whether a company is unable to pay its debts, as set out in s.123(2) of the Insolvency Act 1986. It held that this did not involve simply tracking the balance sheet in a company’s accounts but instead considering assets valued at their present value and taking into account contingent and prospective liabilities when calculating the value of liabilities.
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Damages
GB Gas Holdings Ltd v Accenture (UK) Ltd and others (2010)
The Court of Appeal upheld the High Court’s decision that in determining whether a fundamental breach of warranty had occurred, the consequences of a series of individual breaches could be aggregated to decide if these amounted to a serious adverse effect on the claimant’s business.
Pre-action disclosure and CFAs
Connaughton v Imperial College Healthcare NHS Trust (2010)
A claimant’s application for pre-action disclosure does fall within a conditional fee agreement, the scope of which covers the claimant’s “claim”. It was held that an application for pre-action disclosure was an interim order and therefore was included in the definition of “claim”.
Litigants in Person
Kinsley v Commissioner of Police for the Metropolis (2010)
In this case, which emphasises the leniency the courts may show towards litigants in person, the Court of Appeal granted relief from the sanctions in an unless order which had struck out the claim of the claimant. The court found that the potential for misunderstanding of the wording of the unless order should be resolved in favour of the litigant in person, taking into account his honest belief that his application for an adjournment would take precedence over the process in place to strike out the claim. It also found that the automatic strike out imposed by the unless order was unduly harsh.
Judgment available via Lawtel (reference AC9200946) – password required.
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Consumer Credit
Joseph Sternlight & others v Barclays Bank plc & others (2010)
In a summary judgment application the court robustly dismissed five test cases from borrowers concerning credit card agreements which, it was claimed, were unenforceable because the APR was the “driver” for the rate of interest. The court found that the rate of interest was in fact the rate stated on the agreement and struck out the claims.
Black Horse Ltd v Speak & Speak (2010)
The defendants entered into a consumer credit agreement with Black Horse and then failed to maintain their repayments. At trial, the defendants contended that the claimant had required them to take out payment protection insurance (PPI) as a condition of obtaining the loan or had in the alternative misrepresented that PPI was a pre-condition to obtaining the loan and in doing so had acted in contravention of the Insurance Conduct of Business Rules. The court found that, as a matter of fact, Black Horse had not required the defendants to take out PPI and the agreement was therefore enforceable. Obiter, the court stated that if Black Horse had represented the PPI to be compulsory but had then described it as optional on the agreement itself, this would not in itself make the PPI optional.
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The 53rd update to the Civil Procedure Rules will take effect from 1 October 2010. Below are some of the key changes that will be introduced:
A new PD 31B will be introduced to regulate the approach of practitioners to considering material which is stored electronically for disclosure in multi-track cases. PD 31B aims to encourage and assist with the disclosure of electronic information and includes a questionnaire which parties will be required to complete if directed by the court or if all parties agree. Emphasis is placed on parties discussing issues relating to e-disclosure prior to the first case management conference. Rule 31 itself will be changed to allow for the questionnaire to be treated as a disclosed document. The Allocation Questionnaire (N150) will also be amended to include questions on e-disclosure. The new PD 31B can be found at Annex 1 to this link.
These are to be amended to simplify lower value IP claims including introducing scale costs for each stage of the process with a total cap on costs of £50,000 for a claim relating to liability and £25,000 for an inquiry as to damages or account of profits. PD 30, Part 45 and the Costs Practice Direction are to be amended accordingly.
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The Ministry of Justice has announced that the Bribery Act 2010, which replaces the previous laws on bribery and corruption and widens the definition of bribery, is to come into force in April 2011. Later this month the government is to launch a short consultation exercise on the guidance about procedures which commercial organisations can put in place to prevent bribery on their behalf.
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Costs
New Law Journal 6 August 2010, pp.1093-1094
Two articles discussing the government’s proposed consultation on the Jackson report.
New Law Journal 13 August 2010, p.1149
Considers the problems with detailed assessments of costs.
Part 36 offers
New Law Journal 13 August 2010, pp.1146-1147
Discusses the need for practitioners to keep a close eye on Part 36 offers following the decision in Gibbon v Manchester City Council (see the July 2010 monthly update for details).
Solicitors Journal 10 August 2010, p.10
Discusses the issues for litigators arising out of Gibbon v Manchester City Council.
ADR
Solicitors Journal 27 July 2010, p.6
Discusses the European Court’s approach to compulsory mediation.
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CPR
New Law Journal 3 September 2010, p.1184
Discusses the new Practice Direction 31B on e-disclosure.
Pre-action disclosure
Solicitors Journal 10 August 2010, p.8
Discusses the decision in Connaughton v Imperial College Healthcare NHS Trust (see above for details).
Insolvency
New Law Journal 3 September 2010, p.1185
Reports on Re Sigma Finance Corporation [2009] UKSC 2 in relation to the pari passu principle.
Procurement
New Law Journal 6 August 2010, pp.1102-1103
Discusses the options for challenge available to disappointed bidders.
Bribery Act 2010
New Law Journal 30 July 2010, p.1079
Examines the impact of the new Bribery Act 2010.
Health
Solicitors Journal 3 August 2010, p.19
Discusses the High Court’s decision in David Edward Tomkins v Knowsley Primary Care Trust [2010] EWHC 1194 (QB) involving breach of a contract for dentistry services.
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