A litigator’s yearbook: 2017 (England and Wales)

As we see another year out, it’s a good time to look back at what 2017 has had in store. In this post we summarise some of the key developments from the perspective of the commercial litigator, covering topics such as privilege, contract law, jurisdiction and various aspects of court procedure. We hope you will find it a helpful reference. Continue reading

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High Court grants non-party broad access to documents relied on at trial despite case having settled before judgment

In a recent decision, a High Court Master has taken a broad view of the documents that should be made available to a non-party where a case settled after trial: Dring v Cape Distribution Limited [2017] EWHC 3154 (QB).

The decision draws a clear line between documents which are read or treated as read by the judge, which are subject to a default position in favour of granting access so long as the applicant has a legitimate interest in the documents – though the court must still conduct a balancing exercise in relation to any harm to other parties’ legitimate interests. In contrast, where documents are not read or treated as read by the judge, there must be strong grounds for thinking that access is necessary in the interests of justice.

The obvious question is which documents are treated as read by the judge. Here the Master took a broad view, essentially finding that the entirety of the paper bundle should be treated as read, though not documents which appeared only in an electronic bundle that was made available for reference in court on the basis that any documents relied on would be copied across to the paper bundle.

The decision emphasises that the courts do not merely provide a public service to the parties to a particular case; previous cases also form the basis of advice to other parties. That means that litigating parties are not free to determine the extent to which aspects of the proceedings should become public. Where parties have legitimate concerns regarding sensitive material, they should take steps to protect it before it is ventilated in court, for example by seeking an order that the court sit in private for the relevant part of the hearing. The present decision suggests that where parties do not take such steps, the court may have little sympathy if they reach a settlement on confidential terms and then seek to prevent material put before the court becoming publicly available.

This issue is topical, as the rules relating to open justice in CPR 39 are currently being considered by a sub-committee of the Civil Procedure Rule Committee (CPRC). The sub-committee’s preliminary note filed for the CPRC’s October meeting suggests it is considering possible amendments to strengthen the rules and help promote awareness that parties cannot waive the public’s right to open justice. Continue reading

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High Court decision may make it more difficult to bring claims against foreign parties under section 423 Insolvency Act (transactions defrauding creditors)

The High Court has held that a claim by a creditor under section 423 of the Insolvency Act 1986 does not fall within the jurisdictional gateway permitting service out of the jurisdiction at common law for claims “under an enactment which allows proceedings to be brought”: Orexim Trading Limited v Mahavir Port and Terminal Private Limited [2017] EWHC 2663 (Comm).

There are conflicting first instance decisions in relation to the court’s approach to the “enactment” gateway in the context of section 423. In this case, the court held that the Court of Appeal’s decision in Re Harrods (Buenos Aires) Ltd (No.2) [1992] Ch 72 is binding authority that, to fall within this gateway, the enactment must indicate on its face that it contemplates proceedings against defendants outside the jurisdiction. Although the court noted that the present gateway is less explicit on this point than the gateway considered in Re Harrods, it held that the same approach should be adopted. The claimant has applied for permission to appeal.

If this approach is followed in other cases, it will be more difficult for creditors to bring section 423 claims in England and Wales against defendants domiciled outside the EU (jurisdictional gateways have no application where the recast Brussels Regulation applies), unless the defendant or claim has another connection to the jurisdiction. The reasoning could potentially be extended to other statutory claims, both under the Insolvency Act and other enactments.

John Whiteoak, a partner, and Andrew Cooke, a senior associate in our contentious restructuring, turnarounds and insolvency team, explore the decision below. Continue reading

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Court of Appeal upholds order for payment of US$70 million under cross-undertaking in damages

The Court of Appeal has confirmed the court’s approach to issues of causation where a defendant applies to enforce a cross-undertaking in damages: SCF Tankers Ltd (formerly Fiona Trust & Holding Corp) v Privalov [2017] EWCA Civ 1877.

A party that obtains an interim injunction (including a freezing injunction) will typically be required to provide a cross-undertaking to the court to compensate the other party if the injunction is later found to have been wrongly granted. The present decision confirms that a party seeking to enforce a cross-undertaking in damages must establish a prima facie case that its loss would not have been suffered “but for”‘ the injunction. It is then for the party who gave the undertaking to rebut the case on causation. When considering such applications, the court should adopt a “common sense” approach to issues of causation, mitigation and remoteness.

The case shows that, in resisting an order to enforce a cross-undertaking, a claimant will not necessarily be able to rely on an argument that the defendant should have applied for a variation to permit transactions and avoid its losses. While each case will turn on its own facts, the decision recognises that there can often be real practical and commercial difficulties in applying for a variation to a freezing injunction.

The decision provides a stark reminder to claimants of the potential for very significant consequences if an injunction is later found to have been wrongly granted. In this case, claimants who were seeking damages of US$850 million ended up being ordered to pay over US$70 million to the parties they had sued.

Gareth Keillor, a senior associate in our disputes team, considers the decision below. Continue reading

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Court of Appeal clarifies extent to which ATE insurance policy is relevant when considering security for costs

A recent Court of Appeal decision confirms that the court can take account of a claimant’s after-the-event (ATE) insurance policy when considering whether to make an order for security for costs: Premier Motorauctions Ltd v PricewaterhouseCoopers LLP [2017] EWCA Civ 1872.

The central question will be whether the policy provides the defendant with sufficient protection in the event that an adverse costs order is made against the claimant. This will depend on the terms of the particular policy and the circumstances in which the insurer can refuse to make payment.

In the present case, the Court of Appeal was satisfied that it was appropriate to grant security, particularly as the claimants’ ATE policy contained no anti-avoidance provisions.

Nick Chapman considers the decision further below. Continue reading

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Parties should not “abuse” the court’s tougher approach to relief from sanctions

The High Court has penalised a claimant in costs for requiring the defendant to apply for relief from sanctions, where the defendant had relied on a letter from the court which (arguably) set out the wrong date for filing costs budgets: Freeborn v Marcal [2017] EWHC 3046 (TCC).

The court emphasised that, following the court’s tougher approach to granting relief from sanctions established in Mitchell and Denton (as outlined here), it is extremely important for parties to ensure that they comply with the CPR. However, parties should not abuse this tougher approach. Parties need to consider whether it is proportionate and appropriate to require their opponent to make an application for relief from sanctions, or to oppose that application, in all the circumstances of the case.

This judgment is consistent with the warning in Denton that the courts are willing to penalise parties who try to hold their opponents to what the court sees as an overly strict approach to compliance with rules and court orders, and illustrates the fine balance litigating parties need to strike.

Laura Askew, an associate in our disputes team, outlines the decision below. Continue reading

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A further reminder of the need for strict compliance in notifying warranty claims

In a recent decision, the High Court found that claims for breach of warranty had not been validly notified to one of seven defendants in accordance with the contractual provisions of a sale and purchase agreement, with the result that claims against all defendants were dismissed: Zayo Group International Ltd v Ainger and others [2017] EWHC 2542 (Comm).

While each case will turn on its own facts, this decision is a further reminder of the need to ensure that notice of warranty claims is given in strict compliance with the terms of the agreement. It follows a number of recent decisions in which the court has struck out warranty claims for defective notice, including Teoco UK Limited v Aircom Jersey 4 Limited (unreported, 25 April 2016) (see post).

The judge in the present case emphasised that the purpose of contractual notice requirements for warranty claims is commercial certainty, and that compliance with such requirements is not a technical or trivial matter.

The case is also of interest in finding service could have been validly effected (if done in time) even though the defendant no longer lived at the address for service given in the agreement.

Tom Henderson, a senior associate in our disputes team, outlines the decision below. Continue reading

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High Court finds privilege applies to documents from which the substance of legal advice can be inferred

In a recent decision, the High Court has considered the question of when a document will be privileged on the basis that it “evidences” a privileged communication and has taken a more liberal approach than previous case law suggested: In the matter of Edwardian Group Ltd [2017] EWHC 2805 (Ch).

The court declined to follow the decision in Financial Services Compensation Scheme Ltd v Abbey National Treasury Services plc [2007] EWHC 2868 (Ch) (“FSCS”) in which the court had held that privilege does not attach to documents which merely allow advice to be inferred, rather than stating the substance of the advice. In the present case, the court considered the FSCS decision to be inconsistent with other authorities to the effect that documents will be privileged if they “give a clue to” or “betray the trend of” legal advice, and concluded that those authorities should be applied instead.

This does not mean, however, that privilege can be claimed for any document which supports an inference – however indirect – about the substance of legal advice. The contents of the document must provide a “definite and reasonable foundation” for the suggested inference. It is not enough that the document would prompt speculation about the advice. Continue reading

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Amended provisions for concurrent expert evidence or “hot-tubbing” now in force

Amendments to Practice Direction 35.11, which governs the procedure for concurrent expert evidence, or “hot-tubbing”, have now come into force after receiving ministerial sign-off on Tuesday this week. The amendments implement a number of recommendations made by the Civil Justice Council report on Concurrent Expert Evidence & ‘Hot-Tubbing’ in English Litigation since the ‘Jackson Reforms’ which was published on 1 August 2016. Key changes are as follows:

  • The new PD 35.11 expressly recognises the possibility of expert evidence being given on an issue-by-issue basis, so that all parties’ experts give their evidence and are cross-examined in relation to a particular issue before moving on to the next issue. The CJC report identified this as a technique that was used in practice, but which had not (until now) been given formal recognition in the CPR.
  • The new provision makes it clear that more than one technique may be used for different parts of the expert evidence in a particular discipline, potentially using a hybrid of concurrent evidence, evidence on an issue-by issue basis, and traditional cross-examination.
  • Where evidence is to be given concurrently or on an issue-by-issue basis, the new PD makes it clear that (i) the court may set the agenda for taking the evidence, as an alternative to directing the parties to agree the agenda, and (ii) where the parties agree the agenda, it is subject to the court’s approval.
  • The new PD clarifies that, where evidence is given concurrently, the court may invite the parties’ representatives to ask questions of the experts once the judge’s questioning has been completed for any issue, rather than waiting until the conclusion of the judge’s questioning overall.
  • The new version states that the questioning by party representatives may be directed toward eliciting evidence on any aspect that has been omitted from consideration up to that point – as well as testing the correctness and/or seeking clarification of the expert’s view. It omits the wording which appeared previously, that such questioning should not cover ground which has been fully explored already and that in general a full cross-examination or re-examination is neither necessary nor appropriate.

The possibility of expert evidence being given concurrently is also to be flagged with a new question in the directions and listing questionnaires, as well as a new standard direction, but these changes do not yet appear to have been put through to the online versions of the forms.

For more information on the new provisions and how they relate to the CJC recommendations, see Maura McIntosh’s post published in July 2017 on Practical Law’s Dispute Resolution blog Testing the waters: CPRC approves new wording for hot-tubbing Practice Direction. Click here to read the post (or here for the Practical Law Dispute Resolution blog homepage).

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High Court can grant retrospective permission to continue a derivative claim

The High Court has held that it has the power retrospectively to validate service of a claim form and particulars of claim in proceedings brought as a derivative claim under the Companies Act 2006, where the claimant was in breach of the statutory requirement to obtain the court’s permission to continue the claim and where a new claim would have been time-barred: Wilton UK Limited v John Shuttleworth and others [2017] EWHC 2195 (Ch).

It is fair to say that Wilton is an unusual case – claimants in derivative claims will usually follow the prescribed procedure and no issue as to validity will therefore arise. In this case the judge deferred for further argument the question of whether he should exercise his power in the claimant’s favour. So, while the decision confirms that the court may retrospectively validate service in these circumstances, the situations in which such an order will be made remain unclear.

Andrew Cooke, a senior associate, and James Leadill, an associate, in our disputes division consider the decision further below. Continue reading

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