The problem with execution is that once it’s done it cannot be undone. This applies to property as well as people. Once a bank has re-possessed your house, it’s difficult to put you back. After all, the bank might have sold it.
This is the problem at the root of this case. Mr Jayashankar faced an application for possession from Lloyds when he went seriously into the red on his mortgage. He tried to have it set aside but failed; Lloyds therefore took possession. Later that day. They don’t hang about.
21 days later he appealed the decision. Pointless? Now he was out? Or would the appeal put him back? A real quandary for Lloyds, who would not be able to do anything with re-possessed properties if it feared an appeal. And a dilemma for the Court, which may face dozens of such applications on a regular, recurring basis…
Section 36 of the Administration of Justice Act 1970 is, astonishingly for an Act, clear. Ish. The Court can stay or suspend possession proceedings when making the order for possession, or before the order is executed. Mr Jayashankar was seeking a stay at his appeal post-execution. It was too late for Mr Jayashankar to apply for a stay; he should have done so when applying for the order to be set aside.
It doesn’t mention anything about appeals, though. Could the Court deal with an appeal post-execution? It would have the effect of overturning the Act, because the Court could end up ordering the possession to be stayed after execution. And there was an unreported case in the White Book (the bible for court practice) that suggested a court could do that.
However, the Court decided, ultimately, it couldn’t. It would be too difficult. Once someone has an order, they can execute it. The idea of them having to wait 21 days for an appeal that might never take place would be wrong – it is interfering with someone’s right to justice. The disappointed party, like Mr Jayashankar, has the opportunity to seek a stay at the hearing date whilst he appealed the order itself; that is sufficient for the defaulter’s human rights to be considered in balance with those owed money.
Nevertheless, we may hear more on this. The County Court judge dealing with the matter pretty much begged the Court of Appeal to look at the case – he himself could not grant permission, it was already an appeal from a deputy District Judge’s order – as he could see a flood of such cases advancing. It may well be that the Court of Appeal comes to the same decision, but at least it would provide binding clarity for the DJs dealing with such things on a daily basis.
Wednesday, 17 August 2011
Wednesday, 10 August 2011
Wright v Cambridge Medical Group [2011] EWCA Civ 669: splitting two causes
Causation is the bugbear of tort. It sounds simple enough. You live your life normally, someone does something wrong, you get injured, you sue, you win. But getting between the something wrong and the injury is awkward. Someone throws a rock at you when you’re driving, you swerve off the road; the throwing is close enough to cause your injury. But if you’re a bystander at the end of the street struck by a lamp-post that’s knocked over by a lorry driver who sees the aftermath of the accident and forgets to look at the road…is the throwing the cause of THAT one?
Even worse is when there are two causes. You get run over, you get taken to hospital, your injury gets worse. Does the original driver pay for the hospital’s exacerbation? Tricky.
Even trickier if one of the parties isn’t present. This is what happened in the Wright case. Distressingly simple facts; Clarissa, an eleven month old girl caught chickenpox, ended up with a hospital bug, and her mother called the doctor. The doctor was negligent; he didn’t bother going to see the girl, and it was agreed that, had he done so, she would have been taken to hospital.
Because the condition did not improve Clarissa’s mother took her to another doctor, who referred her at once to the hospital. That’s when things got even worse. Clarissa was already suffering, but the hospital made it worse – the antibiotics applied inflamed the bacterial strain. Clarissa is left with long term damage to her hip.
Naturally, Clarissa brought a claim against the initial doctor’s practice. For some reason she didn’t sue the hospital; nor did the doctor sue for a contribution. So this was the problem. At first instance the court couldn’t find that the doctor’s negligence caused the hip injury. That was due to the hospital’s treatment, which would have happened regardless of when Clarissa was taken there. Even though the doctor was negligent, he hadn’t caused the loss.
Clarissa’s mother brought the case to appeal. Surely Clarissa suffered at least SOME harm when the original doctor failed to make the referral? And the hospital made it worse? On normal legal principles the initial negligence would carry though. It’s rare when a second bout of negligence completely destroys the initial bout from a causation perspective. The case of Rahman v Arearose suggests that, in circumstances where two bits of negligence reinforce each other, both those negligent caused the greater damage.
And so the Court of Appeal found in favour of Clarissa. The hospital lost a couple of days of analysis and treatment because the doctor failed to refer in time. It’s not outrageously unforeseeable that a hospital, in circumstances where they have little time, might get the treatment wrong, even more so when that already limited time is truncated by 48 hours. The two actions were close enough to make sure the doctor was still on the hook. And that’s without even considering whether an on-time referral might have meant a different doctor – one who would not have made the same mistake – would have dealt with matters at the hospital. Especially given that by the time Clarissa went to the hospital it was a weekend – when there were fewer paediatric consultants to hand.
The difficulty in causation is shown though by the Court of Appeal coming to a 2-1 decision – and Smith LJ had subtly different reasons to Neuberger LJ in allowing the appeal. Perhaps the situation would have been made clearer had the hospital been involved in the case; there is no indication as to why it was not…
Even worse is when there are two causes. You get run over, you get taken to hospital, your injury gets worse. Does the original driver pay for the hospital’s exacerbation? Tricky.
Even trickier if one of the parties isn’t present. This is what happened in the Wright case. Distressingly simple facts; Clarissa, an eleven month old girl caught chickenpox, ended up with a hospital bug, and her mother called the doctor. The doctor was negligent; he didn’t bother going to see the girl, and it was agreed that, had he done so, she would have been taken to hospital.
Because the condition did not improve Clarissa’s mother took her to another doctor, who referred her at once to the hospital. That’s when things got even worse. Clarissa was already suffering, but the hospital made it worse – the antibiotics applied inflamed the bacterial strain. Clarissa is left with long term damage to her hip.
Naturally, Clarissa brought a claim against the initial doctor’s practice. For some reason she didn’t sue the hospital; nor did the doctor sue for a contribution. So this was the problem. At first instance the court couldn’t find that the doctor’s negligence caused the hip injury. That was due to the hospital’s treatment, which would have happened regardless of when Clarissa was taken there. Even though the doctor was negligent, he hadn’t caused the loss.
Clarissa’s mother brought the case to appeal. Surely Clarissa suffered at least SOME harm when the original doctor failed to make the referral? And the hospital made it worse? On normal legal principles the initial negligence would carry though. It’s rare when a second bout of negligence completely destroys the initial bout from a causation perspective. The case of Rahman v Arearose suggests that, in circumstances where two bits of negligence reinforce each other, both those negligent caused the greater damage.
And so the Court of Appeal found in favour of Clarissa. The hospital lost a couple of days of analysis and treatment because the doctor failed to refer in time. It’s not outrageously unforeseeable that a hospital, in circumstances where they have little time, might get the treatment wrong, even more so when that already limited time is truncated by 48 hours. The two actions were close enough to make sure the doctor was still on the hook. And that’s without even considering whether an on-time referral might have meant a different doctor – one who would not have made the same mistake – would have dealt with matters at the hospital. Especially given that by the time Clarissa went to the hospital it was a weekend – when there were fewer paediatric consultants to hand.
The difficulty in causation is shown though by the Court of Appeal coming to a 2-1 decision – and Smith LJ had subtly different reasons to Neuberger LJ in allowing the appeal. Perhaps the situation would have been made clearer had the hospital been involved in the case; there is no indication as to why it was not…
Thursday, 4 August 2011
G v The Head Teacher & Governors of St Gregory's Catholic Science College [2011] EWHC 1452 (Admin): political correctness gone mad
I’ve read this decision three times and it still doesn’t make any sense. It’s long established that schools cannot discriminate on religious grounds through imposing offensive uniform requirements. So demanding boys have short hair is discriminatory against Sikhs or Rastafarians, for example. School dress codes will therefore have an exclusion for properly, genuinely held religious beliefs.
But CORNROWS?
St Gregory’s Catholic Science College in Harrow has a strict dress code. It bans cornrows. Concerned about gang influence in the area. Fair enough? According to Mr Justice Collins, no. A blanket ban on them is unfair, the school should consider each case on an individual basis. Because it does so when Sikh boys start attending. It allows them to have longer hair than normal. By considering them on a case by case basis.
But CORNROWS?
As far as I can find out there is no religion that demands its adherents wear cornrows. And when SG was thrown out before he started attending, because he had cornrows, he could not say that there was a religious reason for wearing them. The best he could say was that he liked them and his family had worn them for years.
Rather bizarrely, the artists formerly known as the Department for Education have given guidance to schools that talks about indirect discrimination. That’s not the bizarre thing; that's sensible. The bizarre thing is that banning cornrows can amount to indirect discrimination, on the basis that the style is adopted by certain races more than others. Leaving aside that in time that might become questionable, there’s nothing inherently “racial” about that particular hairstyle. Besides which there may be valid grounds for banning cornrows. Such as gang culture.
The school was fairly clear in its dress policy that hair should be small-c conservative. Braids, for boys, were out. The school was quite insistent with regard to its uniform policy; indeed the government recommends uniforms. Nevertheless, an 11 year old boy was so disgusted about being made to have a different haircut, he complained about sexual and racial discrimination.
The sexual discrimination claim was dealt with sharpish, the racial one less so. Cornrows are, according to a report in the case, a sign of freedom from slavery; a shaved head was a slave’s uniform, so freed slaves would wear long hair, carefully groomed into cornrows, or twisted into dreadlocks. To this extent, cornrows are no different from a Rastafarian hairstyle and therefore should be permitted. But cornrows are a lifestyle choice, rather than a religious obligation. Otherwise, how come every other boy who had cornrows was quite prepared to change hairstyle to match the uniform?
So how can it be racial? The Equality Commission weighed in but its evidence was thrown out by the judge as being worse than useless, it had to pay costs to the school. More good use of taxpayers' money there.
Yet despite this the judge decided that it could be indirect discrimination to ban cornrows. A group of people took them seriously, therefore they could be disadvantaged, and as they largely come from one ethnic group – although the court did not seem to go into the differences between west and east African styles, between races of people that are, genetically, more different than Caucasians are from Maori – there could be indirect discrimination.
The judge went further. He went back to a 1983 case about Sikhism and decided that “family and social customs can be a 'part of ethnicity' within the meaning of the [Race Discrimination] Act.” This is surely going too far. Sikhism is not a family tradition but a religion with hundreds of years of proud history. If a family tradition is a part of ethnicity, does that allow a die-hard football fan to wear his club’s shirt to school? Because his dad, granddad and great-granddad were all supporters?
The decision to me makes next to no sense. It seems the court has just given way to a pre-teen who had a tantrum over his do. Whether the school was right or wrong to take such a strict line is irrelevant – that is the school’s choice and the choice of the parents who send their children there. Why should that be overturned for reasons of fashion?
But CORNROWS?
St Gregory’s Catholic Science College in Harrow has a strict dress code. It bans cornrows. Concerned about gang influence in the area. Fair enough? According to Mr Justice Collins, no. A blanket ban on them is unfair, the school should consider each case on an individual basis. Because it does so when Sikh boys start attending. It allows them to have longer hair than normal. By considering them on a case by case basis.
But CORNROWS?
As far as I can find out there is no religion that demands its adherents wear cornrows. And when SG was thrown out before he started attending, because he had cornrows, he could not say that there was a religious reason for wearing them. The best he could say was that he liked them and his family had worn them for years.
Rather bizarrely, the artists formerly known as the Department for Education have given guidance to schools that talks about indirect discrimination. That’s not the bizarre thing; that's sensible. The bizarre thing is that banning cornrows can amount to indirect discrimination, on the basis that the style is adopted by certain races more than others. Leaving aside that in time that might become questionable, there’s nothing inherently “racial” about that particular hairstyle. Besides which there may be valid grounds for banning cornrows. Such as gang culture.
The school was fairly clear in its dress policy that hair should be small-c conservative. Braids, for boys, were out. The school was quite insistent with regard to its uniform policy; indeed the government recommends uniforms. Nevertheless, an 11 year old boy was so disgusted about being made to have a different haircut, he complained about sexual and racial discrimination.
The sexual discrimination claim was dealt with sharpish, the racial one less so. Cornrows are, according to a report in the case, a sign of freedom from slavery; a shaved head was a slave’s uniform, so freed slaves would wear long hair, carefully groomed into cornrows, or twisted into dreadlocks. To this extent, cornrows are no different from a Rastafarian hairstyle and therefore should be permitted. But cornrows are a lifestyle choice, rather than a religious obligation. Otherwise, how come every other boy who had cornrows was quite prepared to change hairstyle to match the uniform?
So how can it be racial? The Equality Commission weighed in but its evidence was thrown out by the judge as being worse than useless, it had to pay costs to the school. More good use of taxpayers' money there.
Yet despite this the judge decided that it could be indirect discrimination to ban cornrows. A group of people took them seriously, therefore they could be disadvantaged, and as they largely come from one ethnic group – although the court did not seem to go into the differences between west and east African styles, between races of people that are, genetically, more different than Caucasians are from Maori – there could be indirect discrimination.
The judge went further. He went back to a 1983 case about Sikhism and decided that “family and social customs can be a 'part of ethnicity' within the meaning of the [Race Discrimination] Act.” This is surely going too far. Sikhism is not a family tradition but a religion with hundreds of years of proud history. If a family tradition is a part of ethnicity, does that allow a die-hard football fan to wear his club’s shirt to school? Because his dad, granddad and great-granddad were all supporters?
The decision to me makes next to no sense. It seems the court has just given way to a pre-teen who had a tantrum over his do. Whether the school was right or wrong to take such a strict line is irrelevant – that is the school’s choice and the choice of the parents who send their children there. Why should that be overturned for reasons of fashion?
Saturday, 23 July 2011
Scullion v Bank of Scotland PLC [2011] EWCA Civ 693: a wunch of bankers
You want to buy a house. You go to the bank for a mortgage. The bank wants to make sure there’s enough equity in the property to lend you the money. The bank gets a surveyor to have a shufti. Surveyor says, yes, it’s worth the money. You borrow and buy. Turns out the surveyor missed something big. You’ve overpaid. The surveyor admits he’s breached his duty to the bank, and is happy to pay the bank compensation. But the bank doesn’t care, it’s not suffered a loss. It’s made a profit, indeed, as you’re paying way more in interest than would otherwise have been due. And rising property prices will mean no negative equity. Can you sue the surveyor?
It’s well established that you can; Smith v Eric Bush. The court knows most housebuyers will rely on the surveyor’s report when making an offer, and surveyors know this. For non-mansions, anyway.
But there’s a recent case that switches that. Mr Scullion was a former builder who wanted to invest some money into a buy-to-let. At a seminar he met a couple of rum fellows, one behind a property development company, the other a property finder. They said they could get him a million quids’ worth of property for the small honorarium of £25k; the remainder would be covered by mortgages, which would in turn be covered by rents.
So he started in a small way. Colleys, a surveying division of Bank of Scotland, gave a report to the development company valuing one flat at £353k with a rental value of £2,000 per month. The company passed the details on to Mr Scullion, and Mr Scullion signed an agreement with the company, with some unusual, barely legible small print, with a view to buying the flat. He decided to go for it. Even better; he got a bargain. The purchase price was under £300k.
Except it wasn’t such a bargain. The whole thing was a small appendix to a larger mortgage fraud. The upshot of it all was that Mr Scullion had a flat that he was only able to rent for a year, for £1,000 per month, and in the end sold it for £270k. Needless to say, both figures well under that advised as being market value by Colleys.
Mr Scullion ended up suing Colleys and at first instance won around £70k, representing the lost rental income. Colleys appealed. Rather churlishly, given the iffiness of its valuation. Even more churlishly, Colleys won. Much to the disquiet of the Court of Appeal.
How could Colleys have won? According to the Court of Appeal, because it was a buy to let. Not a house purchase. Therefore the Smith v Eric Bush rule couldn’t apply. A buyer to let is a bit more sophisticated than a house purchaser and would be expected to get their own individual valuation. And it was a commercial transaction. One of many a business might undertake. Not the personal dwelling of a desperate purchaser. Over half of buyers to let have more than one let property; the Court held it was hardly a near certainty that a buyer to let would rely on a lender’s survey. If Mr Scullion could afford to pay £25k in commission, why not spend the extra grand or so on his own survey?
So Mr Scullion lost. With a powerful, if regretful, judgment from Neuberger LJ to boot. I yield to no-one in my admiration of the Lord Justice, but I cannot help but think he got this one wrong. The evidence that buyers to let don’t get their own valuations looks fairly slender. With the Smith decision surveyors know they’re often on the purchaser’s hook and must factor that into their fees. And Colleys got the valuation spectacularly wrong. Given that they mentioned rental value, Colleys must have known SOMEone may be buying to let; and with a capital value of £350k their rental value was well over any likely mortgage figure. All these factors play in favour of Mr Scullion. There’s not much that plays in favour of Colleys. They valued badly and got away with it.
It may yet go to the Supreme; even though it was a 3-0 decision, expressions of regret are often a signal to take it further. Is there sufficient public interest in such a case? Perhaps – if the buy to let market collapses further people would be interested in seeing whether they can sue anyone. That would cause difficulties for surveyors, which might be another reason why the decision went the way it did…
It’s well established that you can; Smith v Eric Bush. The court knows most housebuyers will rely on the surveyor’s report when making an offer, and surveyors know this. For non-mansions, anyway.
But there’s a recent case that switches that. Mr Scullion was a former builder who wanted to invest some money into a buy-to-let. At a seminar he met a couple of rum fellows, one behind a property development company, the other a property finder. They said they could get him a million quids’ worth of property for the small honorarium of £25k; the remainder would be covered by mortgages, which would in turn be covered by rents.
So he started in a small way. Colleys, a surveying division of Bank of Scotland, gave a report to the development company valuing one flat at £353k with a rental value of £2,000 per month. The company passed the details on to Mr Scullion, and Mr Scullion signed an agreement with the company, with some unusual, barely legible small print, with a view to buying the flat. He decided to go for it. Even better; he got a bargain. The purchase price was under £300k.
Except it wasn’t such a bargain. The whole thing was a small appendix to a larger mortgage fraud. The upshot of it all was that Mr Scullion had a flat that he was only able to rent for a year, for £1,000 per month, and in the end sold it for £270k. Needless to say, both figures well under that advised as being market value by Colleys.
Mr Scullion ended up suing Colleys and at first instance won around £70k, representing the lost rental income. Colleys appealed. Rather churlishly, given the iffiness of its valuation. Even more churlishly, Colleys won. Much to the disquiet of the Court of Appeal.
How could Colleys have won? According to the Court of Appeal, because it was a buy to let. Not a house purchase. Therefore the Smith v Eric Bush rule couldn’t apply. A buyer to let is a bit more sophisticated than a house purchaser and would be expected to get their own individual valuation. And it was a commercial transaction. One of many a business might undertake. Not the personal dwelling of a desperate purchaser. Over half of buyers to let have more than one let property; the Court held it was hardly a near certainty that a buyer to let would rely on a lender’s survey. If Mr Scullion could afford to pay £25k in commission, why not spend the extra grand or so on his own survey?
So Mr Scullion lost. With a powerful, if regretful, judgment from Neuberger LJ to boot. I yield to no-one in my admiration of the Lord Justice, but I cannot help but think he got this one wrong. The evidence that buyers to let don’t get their own valuations looks fairly slender. With the Smith decision surveyors know they’re often on the purchaser’s hook and must factor that into their fees. And Colleys got the valuation spectacularly wrong. Given that they mentioned rental value, Colleys must have known SOMEone may be buying to let; and with a capital value of £350k their rental value was well over any likely mortgage figure. All these factors play in favour of Mr Scullion. There’s not much that plays in favour of Colleys. They valued badly and got away with it.
It may yet go to the Supreme; even though it was a 3-0 decision, expressions of regret are often a signal to take it further. Is there sufficient public interest in such a case? Perhaps – if the buy to let market collapses further people would be interested in seeing whether they can sue anyone. That would cause difficulties for surveyors, which might be another reason why the decision went the way it did…
Tuesday, 12 July 2011
Fox v Foundation Piling Ltd [2011] EWCA Civ 790: Fox kills Woolf
One of the advantages in being a judge in charge of an investigation is that you can effectively implement your own investigation in your own court. So Lord Justice Jackson, tasked with sorting out the court service and expense of litigation, could then give common law guidance in his judgments.
Although given one of his first judgments I’m not sure that’s totally a good idea. Nemo iudex and all that.
The case of Fox is a typical personal injury claim where the claimant basically lies about their injury. To any doctor, “oh, it hurts, I’m dying”; when nobody’s looking, star midfielder in a Sunday league team. Insurers are wise to this and often send out surveillance teams to take sub rosa footage. As they did with Mr Fox.
Mr Fox fell over while carrying something heavy. Hurt his back. Naturally he sued his employer. Whose insurer took video footage. Which showed that Mr Fox was walking sans problem towards the hospital for an examination, until he got within sight of the spinal clinic, whereupon he produced a walking stick and started limping.
Mr Fox was suing for the hundreds of thousands; the insurer took a view and had thrown a little over sixty grand into court. Once the insurer appreciated the surveillance evidence it cut that in half. Mr Fox took it – and sought his costs. The insurer said, hang on, we’re entitled to the costs between our initial payment and your accepting. We really won over that period. The court agreed with the insurer, and said that even had the payment not been reduced, Mr Fox’ mendacity – be it conscious or subconscious – should preclude him from getting costs.
Now, judges have a wide discretion over costs. The Court of Appeal has often stated that it will not interfere with a judge’s general appreciation of the whole thing; it takes a special case to get in the way. Yet on appeal Jackson LJ decided that he would interfere.
Jackson looked at previous cases where judges had deviated from the loser pays principle. Usually on the basis of misconduct of the party, or a massive exaggeration of a claim. Not dissimilar to the Fox case. The problem was that the insurer had sat on video evidence for a number of years. Why was it not disclosed sooner? Mr Fox would have conceded the lower payment a lot earlier.
Regardless, Jackson has re-booted the costs position. He says that departing from loser pays has gone on far too much. It involves significant additional cost litigating the litigation itself. Whereas that may do justice for an individual case, he said, it causes problems for other court users. Therefore it is better to take a strict line for the benefit, and certainty, of all. Mr Fox therefore got his costs.
Which basically destroys the whole point of the Woolf reforms of doing justice between the parties, of encouraging a proportionate approach to litigation. Why should a judge bespoke a costs order now? Given Jackson’s dicta, it seems the ends do justify the means. Jackson’s insistence on certainty may have a wholly deleterious effect. Party A can get its expensive lawyers to go to town on Party B, grinding it into oblivion, knowing it won’t have to pay the penalty so long as it gets the slightest win. Party A sues for £100m, Party B offers £10k to go away, case goes to court for three months and Party A gets £11k – yet per Jackson B would pay all of A’s costs…
It seems particularly egregious given the Court of Appeal’s decision in Medway Primary Care Trust v Marcus [2011] EWCA Civ 750. In that one the Court took a far more robust view against a claimant that recovered a minute proportion of a claim. Mr Marcus had a leg amputated and his damages were agreed at around half a million quid; the question was whether the amputation was the hospital’s fault or just one of the vicissitudes of life. The court found that it was the latter, and the only claim was for the pain and suffering Mr Marcus suffered for a couple of days whilst the hospital faffed around with investigating what Mr Marcus’ problem was. He got two grand for that.Although given one of his first judgments I’m not sure that’s totally a good idea. Nemo iudex and all that.
The case of Fox is a typical personal injury claim where the claimant basically lies about their injury. To any doctor, “oh, it hurts, I’m dying”; when nobody’s looking, star midfielder in a Sunday league team. Insurers are wise to this and often send out surveillance teams to take sub rosa footage. As they did with Mr Fox.
Mr Fox fell over while carrying something heavy. Hurt his back. Naturally he sued his employer. Whose insurer took video footage. Which showed that Mr Fox was walking sans problem towards the hospital for an examination, until he got within sight of the spinal clinic, whereupon he produced a walking stick and started limping.
Mr Fox was suing for the hundreds of thousands; the insurer took a view and had thrown a little over sixty grand into court. Once the insurer appreciated the surveillance evidence it cut that in half. Mr Fox took it – and sought his costs. The insurer said, hang on, we’re entitled to the costs between our initial payment and your accepting. We really won over that period. The court agreed with the insurer, and said that even had the payment not been reduced, Mr Fox’ mendacity – be it conscious or subconscious – should preclude him from getting costs.
Now, judges have a wide discretion over costs. The Court of Appeal has often stated that it will not interfere with a judge’s general appreciation of the whole thing; it takes a special case to get in the way. Yet on appeal Jackson LJ decided that he would interfere.
Jackson looked at previous cases where judges had deviated from the loser pays principle. Usually on the basis of misconduct of the party, or a massive exaggeration of a claim. Not dissimilar to the Fox case. The problem was that the insurer had sat on video evidence for a number of years. Why was it not disclosed sooner? Mr Fox would have conceded the lower payment a lot earlier.
Regardless, Jackson has re-booted the costs position. He says that departing from loser pays has gone on far too much. It involves significant additional cost litigating the litigation itself. Whereas that may do justice for an individual case, he said, it causes problems for other court users. Therefore it is better to take a strict line for the benefit, and certainty, of all. Mr Fox therefore got his costs.
Which basically destroys the whole point of the Woolf reforms of doing justice between the parties, of encouraging a proportionate approach to litigation. Why should a judge bespoke a costs order now? Given Jackson’s dicta, it seems the ends do justify the means. Jackson’s insistence on certainty may have a wholly deleterious effect. Party A can get its expensive lawyers to go to town on Party B, grinding it into oblivion, knowing it won’t have to pay the penalty so long as it gets the slightest win. Party A sues for £100m, Party B offers £10k to go away, case goes to court for three months and Party A gets £11k – yet per Jackson B would pay all of A’s costs…
Mr Marcus claimed he had won, albeit just a quarter of a per cent of his claim, and therefore he should get his costs; if the hospital thought the claim was OTT it should have made an offer. The hospital said it was stymied. Had it offered the right amount of claim (£2,000) using the Part 36 mechanism, and Mr Marcus accepted the offer, as a consequence of the rules the hospital would have been on the hook for his costs, including success fee uplift; costs that were estimated at £100k – for what was pretty much a small claim. Fair?
Court of Appeal decided it wasn’t. The hospital had won the case. The tiny claim they’d lost on was not the major focus of the case – indeed it was thrown in almost at trial as an afterthought – and the starting point should have been that Mr Marcus pay the hospital’s costs. The Court of Appeal applied a 25% discount on those costs because of some questionable case strategy (late admissions, that sort of thing) but even though Mr Marcus “won” he ended up losing.
There was a dissent. Which was that Mr Marcus had won, albeit only technically, ergo he should get his costs. Forget Woolf and the whole issue by issue thing. If the hospital had bunged the right amount into court, rather than zero, it would have had an argument that the £100,000 in costs it was facing was disproportionate. And therefore get it decimated on costs assessment. As the hospital didn't pay into court, it should bear the consequences of losing the case. I.e. paying Mr Marcus’ costs. To be fair, “just” 50% of them as a penalty to Mr Marcus for an unwitting exaggeration. A gigantic costs liability for a tiny claim. The dissent of course does not bind. The dissenting judge? Jackson LJ.
It seems to me that these two cases are difficult to reconcile. One demands certainty even when it causes injustice to the instant parties, the other demands a finger-in-the-air exercise to do overall justice to the merits. Perhaps one will go to the Supreme Court. If so, which will the Supremes prefer? Woolf’s reforms or Jackson’s?
Tuesday, 28 June 2011
Nottinghamshire & City Of Nottingham Fire Authority v Gladman Commercial Properties & anor [2011] EWHC 1918 (Ch): late, late evidence
So. You know the score for a trial. You get your documents, then you get your witnesses, then you get your experts. All the things you have are exchanged, piecemeal, but simultaneously. There is no trial by ambush beloved of TV movies of a last-minute flourishing of the surprise witness.
At least in theory.
Not the practice in this case. Gladman bought an old fire station to turn into student flats. The fire service and the local council told Gladman that the station could provide 600 flats minimum. Time for payment came, and Gladman refused. Not enough room. We are rejecting the contract, we are not bound to complete. The fire service claimed that Gladman was obliged to pay; Gladman counterclaimed (and brought the council in for good measure).
The case revolves almost solely around whether the council’s reps got the number of flats so wrong that it amounted to fraud. For that you would expect there to be serious witness evidence from the council. Except there was not. The number one witness not only did not turn up, he had not even provided a witness statement.
So when the fire service’s witnesses finished, Gladman thought it had an open goal. All its witnesses needed to do was state that they relied on the misrepresentation. Not much room for controversy there.
Then came the TV movie twist. The council provided a statement from its number one witness. Gladman was quite understandably outraged. This was trial by ambush. Its submissions were ready – the council didn’t have anyone denying that the statement was made fraudulently – and suddenly it would have to change. Or would it? Why should the council be allowed to bring in this new witness? Gladman therefore opposed the council’s application to add new evidence.
The judge reluctantly allowed the council’s application. Reluctantly, because he had to give Gladman time to prepare for this new witness, which meant, given the court’s chock-a-blockness, the trial would have to be kicked over a couple of months. However the judge weighed up his options. What if he turned the evidence down? You’d have a witness with valid things to say, hanging around at court, unable to say them. And if the judge found that the would-be witness HAD behaved fraudulently, he would be making a finding of fact that would be disastrous for the witness. “It would be a gross injustice if having ruled that [the witness’] evidence could not be relied upon then to go on and decide the case against [the council] and the Fire Service by criticising their failure to call [him] despite the fact that he has been at all material times from 11th April 2011 available as a witness. I cannot conceive of a greater and justified complaint about a decision that would have been made that way.”
The big penalty for the council is in costs. The judge warned at the end that there would be serious consequences. The hint is that if the witness’ evidence proves conclusive, the council might end up winning the case, but paying all of Gladman’s costs – on the basis that the trial may have been unnecessary had the evidence been made available. We won’t know until the end of the case, if indeed it doesn’t settle, but the card has been marked.
So it is possible to get very late evidence in. The court will consider it an injustice if valid evidence is kept out just because it is late. The best way to do justice in these circumstances is to make the “guilty” party cough up all the wasted costs of the innocent. That could well be such a serious penalty it might dissuade a party from chancing its arm.
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Thursday, 9 June 2011
Araci v Fallon [2011] EWCA Civ 668: derby disaster
The biggest horse race on the flat was held over the weekend; a tight finish saw 19 year old Mickael Barzalona claim a thrilling victory, just ahead of Her Majesty’s Carlton House and comparative outsider Treasure House.
One jockey who was not involved in the finish was Kieran Fallon, six time Champion Jockey and three time Derby winner. Definitely one to have on one of your horses, which is what the Araci family thought when they had a likely nag. They accordingly paid Fallon ten grand to be the chosen rider for Native Khan, entered in the Derby on the back of three wins in five races. Fallon rode it to two of those wins; he evidently knew the horse.
Trouble is, Fallon then agreed to ride a different horse, Recital. The Aracis were not pleased; not only would they lose the services of a top rider, they would see him riding in opposition. If it came to a head to head between Recital and Native Khan, Fallon’s knowledge might have been the difference maker.
So the Aracis sought an injunction to stop Fallon riding. It was pretty much conceded that they could not force Fallon to ride Native Khan, indeed they probably wouldn’t want that – the trust had gone – but they could stop him taking advantage.
It’s a difficult thing to get. The Court does not like a party stopping someone else from making a living, even if that living is a breach of contract. Normally the Court would say that damages would be enough. Indeed this is what the court decided first time of asking; Fallon was free to ride Recital.
But the law can’t half shift when it wants to. An appeal was lodged, heard the same day and the result given the next morning. The reason? That morning happened to be Derby day. And the Court of Appeal awarded an injunction.
The Court looked at the factors afresh. The case was finely balanced, but there were a couple of key considerations. Firstly, would damages be appropriate? Even ignoring the kudos in owning a Derby winner, damages would be fiendishly difficult to calculate. If Recital won, with Native Khan third, would Fallon’s breach of contract have caused NK to finish third rather than first? Or would third have been the best it could have done even had I been riding Recital? Secondly, let’s assume that the Aracis missed out on the huge stud fees a Derby winner could command. Maybe millions of pounds. Could Fallon afford it? There was no evidence.
So the Court took the unusual step of awarding an injunction. Only an interim one – stopping Fallon from riding in the Derby, the rest will be sussed out at a full trial – but the Court was pretty scathing of Fallon’s evidence, giving a pointer to an end result. The injunction may yet be made permanent insofar as major races go, and damages will also, presumably, be awarded. As best as can be assessed, at any rate.
Ironically, Native Khan came fifth – just ahead of Recital. Maybe Fallon made the wrong choice anyway…
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