Thursday, 22 December 2011

Woodland v The Swimming Teachers’ Association & others [2011] EWHC 2631 (QB): deep end

Another sad personal injury case; the crumb of comfort in this one was that damages were definitely going to be paid to the claimant, it was “just” a demarcation dispute as to which defendant would pay up.

There were five of them; the STA, a lifeguard, a swimming teacher, Essex County Council and Basildon District Council.  The scene was a school swimming lesson in Basildon; the lessons were put on by the swimming teacher, she employed a lifeguard, Basildon owned the pool and Essex ran the school.

Annie Woodland was a good swimmer and had been put in the top group, but something went wrong.  She was spotted in the pool unconscious and underwater.  She suffered serious brain injuries.

Damages are to be determined, and will be paid by an insurance company; but which insurer?   Everyone involved may have had some contribution to the accident.  This particular case saw Essex trying to get the case against it thrown out.

And it did.  It did not involve any development in law – indeed this was the point Essex made; the law on this was well-established, Essex did not owe a stringent duty of care to each and every individual pupil.  Like any parent, it could arrange school visits and suchlike and expect those in charge of those visits to look after the children.

The interesting aspect of the case was the attempt to widen this duty by Annie’s QC.  He argued that the nature of the duty had changed over time, and that other jurisdictions – he cited a Queensland case – had said that the local authority could not delegate the duty of looking after a schoolchild while at school.

The law on duty has changed over the years; back in Victorian times the courts, staffed by the gentlemanly or noble classes, were quite keen to protect factory or landowners, who also came from the gentlemanly or noble classes.  Duty was extremely narrow.  The gate to the garden of compensation was flung open when Mrs Donoghue suffered a toxic shock from thinking she may have ingested an involuntary gastropod; they were widened further over the years until Junior Books v Veitchi practically demolished the fence.  Which has been re-constructed over the years to get back to where we were in about 1971.

But the “who is your neighbour?” test is flexible – it is perhaps unsurprising that Annie’s QC tried to extend it once more to the local authority.  After all, that would forestall any risk of winning against a defendant who could not pay and whose insurers declined to step in.  It did not work in this case, as the Court stood on its existing principles rather than budge them.  Sound reasons, too, such an extension of liability would have an effect on insurance, and would open up the floodgates to other claims – babysitters are one thing, but imagine a school football coach’s liability for a foul by one of his pupils, and extending that to the local authority employer – but nobody can say that that will never be opened in future.

Wednesday, 7 December 2011

Shah & anor v HSBC Private Bank (UK) Ltd [2011] EWCA Civ 1154: the silent whistle

Mr Shah banked with a private arm of HSBC.  In September 2006 he wanted to transfer out $30m; in February 2007 he wanted to transfer out another $9m.  They were to go out in four tranches.  The smallest tranche (by far) of $7k was to go to an ex-employee.  HSBC however smelt a rat.  Was this money laundering?  The money had only come into his account in July 2006.  HSBC therefore put a stop on things; none of the transactions went through.
The ex-employee, stiffed out of his small payment, was extremely disgruntled.  He grassed Mr Shah up to the Zimbabwean authorities as a suspected money launderer.  Zimbabwe therefore froze Mr Shah’s assets; Mr Shah in turn sued HSBC for mucking him around.  For $300,000,000.
HSBC relied on defences in the Proceeds Of Crime Act 2002 that let it hold on to the money while it reported matters to the authorities.  The problem was HSBC had to swear that its staff had suspicions, and HSBC was extremely keen to keep the members involved anonymous.  Just in case.  So HSBC brought out the various documents that had been pinging internally, and blanked out the names of the lowlier employees.  Mr Shah said that they had to be disclosed; standard disclosure, after all, dictates the whole of any relevant documents be shown to him.  Maybe some of the staff bore him grudges?  They had acted maliciously?  He needed to cross-examine to check.  He even identified a couple of employees that might have reasons to dislike him.  HSBC still refused to un-cross out the names; Mr Shah applied to court to force HSBC to do so.
The court was not impressed.  The judges thought Mr Shah was fishing.  Under the Civil Procedure Rules there was no need to disclose the employees’ names.  Mr Shah had identified no pressing need and even if an employee had acted out of malice the decision to hold up his money had been taken by someone else - the money laundering officer.
This was in some ways an unfortunate decision.  Because HSBC had a back-up argument – that public interest overrode the interests of Mr Shah.  Redacting documents for such a reason would have been a most interesting spat to have decided; but because the Court had already found for HSBC on the main issue, it refused to paddle in such dangerous waters.
But the decision emphasized that the whistleblowers themselves are not so important as for establishing the mind of a corporate entity.  The money laundering officer (more properly, the money laundering PREVENTING officer) was able to swear to the corporate mind.  No need for anything more forensic.