Six claimants, seven defendants. You just know when you see that that costs will be a problem. Throw in it’s a will dispute and you’ve got emotion as well.
Facts are, as so often, simple. In 1996 a widower married a widow. In 1999 they made mutual wills. Half to the widow’s sons, the other half split between all the other descendants. In 2001 the widow died. And then in 2003 the twice-widower changed his will; he cut out the widow’s children and grandchildren entirely. Needless to say the widow’s children and grandchildren – the Shovelars – sued the executors and widower’s descendants.
Mutual wills work like this. A marries B, they have children, and they build up a portfolio of assets. A worries that if he dies B will re-marry, have more children (or worse, step-children), and A’s children will be disinherited in favour of B’s new family (I cite the precedent of Cinderella). B has the same fear if she dies first. So they make mutual wills. A’s will says the same as B’s. There is a mutuality of interest there. What it means is that when one dies, it is unconscionable for the other to change their will. It would mean that the pre-deceased’s dying wish would not be fulfilled.
And this is pretty much the scenario here; the survivor changed his will, and the court decided that he could not do that. There were mutual wills, therefore the executors had to follow the previous will. The 2003 change was nugatory. (The executors, being smart, had not paid out the estate.)
The claimants won. They asked for their costs. The judge therefore went through the procedural history.
The starting point was easy enough; the claimants had won. The defendants should pay. The executors took a fairly limited part in the action, so they got their limited costs out of the estate first.
As for the rest, the judge looked at the usual factors to see whether she should be swayed from the initial starting point. And those all worked in the claimants’ favour. They had been open to mediation from the start. They suggested a stay in the case for alternative dispute resolution. They offered a without prejudice meeting when their costs were £25k. The defendants batted it off throughout. The only time they agreed to a mediation, they said it couldn’t take place because one of them was in the Caribbean.
There were, eventually, offers of settlement. The claimants offered to take £98k plus costs (later reduced to £84k). The defendants offered a split between the wills, which would have left the defendants receiving nearly £70k with the claimants paying £25k. Only right at the end, just before trial, when the claimants had gone to considerable expense to proving their claim, did the defendants offer a split – and that was subject to each side paying their own costs. The defendants came up with 1 witness statement at trial; they hardly had any costs...
So in terms of fighting the case the claimants had done everything the court likes – made offers, suggested settlement meetings, kept the other side informed of their costs. The defendants had done sweet nothing.
And at trial the claimants had done even more. They had beaten their offers.
So the costs should have been easy. The claimants get costs – with punitive interest/indemnity rates being paid. Because they had beaten their offers.
The problem that stuck in the judge’s throat was that they were HUGE. £160k costs for a £132k estate.
And that’s just the base costs. The claimants were working under a conditional fee. So take those costs and double them. Ouchie.
So the judge looked around for ways in which she could somehow lessen the blow. Firstly, those offers. They came too soon, she said. Before exchange of evidence. Defendants could not suss out how good those offers were. So unfair to award the indemnity costs and punitive interest.
Secondly, the defendants argued that the costs should come out of the estate. It wasn’t their fault that they were brought into the action; it was as a result of the change of wills. Really this was the estate’s fault. Ergo the costs should come out of the estate.
You can see the problem with this. The successful claimants would get nothing. It would cost them the thick end of two hundred grand to be proved right. Whereas the defendants would walk away being responsible for their own, nugatory, costs. There would be no incentive for early settlement. After all, the defendants could have said “OK, you win, we won’t make our claim” on day one. Not doing so would have meant the estate went to lawyers rather than the Shovelars.
So the judge ordered that the defendants bear the costs. Other than the executors – their fees would come out of the estate. As to the level of costs? The judge said that was a matter for assessment. Not for her. But she gave a strong indication by ordering only £30k to be paid on account – normally you’d get maybe half of what you’d expect to get on assessment.
Everyone appealed. The Court of Appeal took the opportunity to make a few statements.
1. This wasn’t a question over will validity per se; it was old-fashioned litigation. The claimants took up one position, the defendants another. In these circumstances loser pays. That had to be the result here.
2. Just how limited WAS the executors’ part in the action? They filed a defence and they cross-examined the claimants. They took an active part in the litigation and did not seek an indemnity BEFORE taking action, which is what any decent trustee should do. Therefore they were a party like any other. They do NOT get an indemnity from the estate; they are just as liable for costs as the other defendants.
3. The judge should not have ruled against the claimants’ offers. They were reasonable, done at reasonable times, and the claimants had behaved reasonably throughout. They were the poster children for reasonable litigants. OK, the offers were pretty early, but every litigation has to have parties taking a view at some stage, and the defendants made no move to accept when they saw the claimants’ case in full. If these claimants did not get the full indemnity consequences, who would?
So the appeal was disastrous for the defendants. Indemnity costs, interest (at 3.5% above base), executors just as liable. Even the amount on account was bumped up to £50k.
The Court of Appeal finished with a stark warning. Ward LJ said:
“Making those orders gives no pleasure. If the claimants are right in their assessment of their costs, then, even without a success fee, the costs incurred by them exceed the sum over which battle has been joined. The great British public must think that something has gone wrong somewhere if litigation is conducted in that way. I share that sense of horror. One answer has to be to engage in mediation constructively and at the very earliest stage. ... A thousand pities that that was not done but the awful costs consequences which have followed do lie at the defendants' door.”
Make love, not war.
Thursday, 15 September 2011
Saturday, 3 September 2011
Relational LLC v Hodges [2011] EWCA Civ 774: bridge across the Atlantic
There is a deep mutual suspicion between the English and American legal systems. The English courts cannot abide the punitive nature of American litigation. English damages are compensatory alone. There is no “reward” for insisting on your legal rights by way of doubling or trebling your dosh. The Americans find English law on libel unduly restrictive of free speech; the deplorably named Libel Terrorism Acts (“tourism” would have been better, but there is a breed of American that sees the two things as identical) that are finding their way through various states have the effect of barring English libel claims in the States.
The upshot is that there is no automatic recognition of judgments. I.e. you sue an American in England and win, you can’t automatically seize their American assets. You need to start again in the States, albeit with a judgment on your side as pretty powerful evidence. Similarly an American has the same problem in reverse with an English defendant.
This is what happened in the instant case. Fairly simple. Relational had a guarantee from a Florida resident, Mr Hodges, which was signed off under Illinois law. Mr Hodges seemingly legged it to Birmingham (West Midlands, not Alabama) when Relational sought to enforce the guarantee. He took a bit of tracing, and indeed claimed that he was in the boozer when the process server said they’d served him at home. The upshot was Relational scampered through to a default judgment in its favour in Illinois. Easily enforceable in the States, but Mr Hodges had no assets there. They were all in the UK.
So Relational sued in England based on their American judgment. Mr Hodges raised various defences – that he hadn’t fought the thing in Illinois (although, crucially, he did appeal), that a Florida judgment extinguished liability and so on – but the really important thing was that he sought security for costs. Given the US judgment was not enforceable in the UK, an English judgment in his favour – which would be for his costs – would not be enforceable in the US. A Mexican stand-off, to utilize a safe third country.
Relational offered to bung £25k into the English court, but the sting in the tail was that it would ask to have that set off against the amounts owed to it by Mr Hodges under the Illinois judgment. So essentially Mr Hodges could win the case, not owe the judgment in America, but would not get any benefit from winning; his legal costs would be swallowed up. Relational would just say “well, OK, we can’t enforce in England, so we’ll take it out of what we owe you.”
There’s a logic there but there’s also the point that Relational had won a legit case in a legit court. And the Court of Appeal was conscious of that. Was it really fair to make a party that had already won pay security? Wasn’t it more to protect English parties against oppressive suits, not ones that, on the face of it, had a very very good chance indeed of winning?
The Court of Appeal therefore dismissed Mr Hodges’ appeal against refusal, and made some more general comments. Longmore LJ said that it would not normally be appropriate to order security from a claimant suing to enforce a pukka foreign judgment. Because it’s up to the defendant to prove the overseas judgment was wrong; the burden of proof was reversed, and the defendant was really the claimant in those circumstances. Same would apply in cases like Mr Hodges’ case; although the Illinois court had granted a judgment without Mr Hodges’ case being considered, Mr Hodges did submit to jurisdiction by appealing. So the English courts ought not interfere too much with it.
It looks as if Mr Hodges’ best case would have been to leave the Illinois judgment untouched and not appeal at all. At least then he could deny Illinois had considered the full facts and he had never agreed to its scrutiny. But given the comments of Longmore LJ it looks to be a difficult argument – he still would have had the burden of showing the judgment was wrong, or fraudulent, or unfair. Difficult one.
The upshot is that there is no automatic recognition of judgments. I.e. you sue an American in England and win, you can’t automatically seize their American assets. You need to start again in the States, albeit with a judgment on your side as pretty powerful evidence. Similarly an American has the same problem in reverse with an English defendant.
This is what happened in the instant case. Fairly simple. Relational had a guarantee from a Florida resident, Mr Hodges, which was signed off under Illinois law. Mr Hodges seemingly legged it to Birmingham (West Midlands, not Alabama) when Relational sought to enforce the guarantee. He took a bit of tracing, and indeed claimed that he was in the boozer when the process server said they’d served him at home. The upshot was Relational scampered through to a default judgment in its favour in Illinois. Easily enforceable in the States, but Mr Hodges had no assets there. They were all in the UK.
So Relational sued in England based on their American judgment. Mr Hodges raised various defences – that he hadn’t fought the thing in Illinois (although, crucially, he did appeal), that a Florida judgment extinguished liability and so on – but the really important thing was that he sought security for costs. Given the US judgment was not enforceable in the UK, an English judgment in his favour – which would be for his costs – would not be enforceable in the US. A Mexican stand-off, to utilize a safe third country.
Relational offered to bung £25k into the English court, but the sting in the tail was that it would ask to have that set off against the amounts owed to it by Mr Hodges under the Illinois judgment. So essentially Mr Hodges could win the case, not owe the judgment in America, but would not get any benefit from winning; his legal costs would be swallowed up. Relational would just say “well, OK, we can’t enforce in England, so we’ll take it out of what we owe you.”
There’s a logic there but there’s also the point that Relational had won a legit case in a legit court. And the Court of Appeal was conscious of that. Was it really fair to make a party that had already won pay security? Wasn’t it more to protect English parties against oppressive suits, not ones that, on the face of it, had a very very good chance indeed of winning?
The Court of Appeal therefore dismissed Mr Hodges’ appeal against refusal, and made some more general comments. Longmore LJ said that it would not normally be appropriate to order security from a claimant suing to enforce a pukka foreign judgment. Because it’s up to the defendant to prove the overseas judgment was wrong; the burden of proof was reversed, and the defendant was really the claimant in those circumstances. Same would apply in cases like Mr Hodges’ case; although the Illinois court had granted a judgment without Mr Hodges’ case being considered, Mr Hodges did submit to jurisdiction by appealing. So the English courts ought not interfere too much with it.
It looks as if Mr Hodges’ best case would have been to leave the Illinois judgment untouched and not appeal at all. At least then he could deny Illinois had considered the full facts and he had never agreed to its scrutiny. But given the comments of Longmore LJ it looks to be a difficult argument – he still would have had the burden of showing the judgment was wrong, or fraudulent, or unfair. Difficult one.
Wednesday, 17 August 2011
Jayashankar v Lloyds TSB plc [2011] EW Misc 9 (CC): sticking the head back on
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.
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, 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?
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