New president and justices of the Supreme Court and new Lord Chief Justice

As announced today, Lady Hale has been appointed the next (and first female) President of the Supreme Court, to replace Lord Neuberger as from 2 October 2017. Lady Hale is currently Deputy President, so that role will have to be filled when her appointment takes effect.

There will also be three new Supreme Court Justices from 2 October: Lady Justice Black, Lord Justice Lloyd Jones and Lord Justice Briggs.

Also from that date, Lord Justice Burnett will become the new Lord Chief Justice, the Head of the Judiciary of England and Wales. His appointment was announced last week.

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Previous expert report did not have to be disclosed where change of expert was not “expert shopping”

The High Court has found that the defendants in this case did not have to disclose their previous experts' reports as a condition of obtaining permission for an extension of time to enable them to serve a report from a new expert: Vilca v Xstrata Limited [2017] EWHC 1582 (QB).

Previous Court of Appeal authorities have established that the court can, and ordinarily will, require a party to waive privilege in a previous expert’s report as a condition of granting permission to adduce evidence from a different expert (see for example Edwards-Tubb v J D Wetherspoon [2011] EWCA Civ 136, considered here).

The present case suggests that the reason for the change of expert may be a key factor in determining whether the court should attach such a condition – in particular whether there is any indication that the change is due to "expert shopping" (described by the court as the potentially disreputable practice of ditching an expert because he would not, for reasons good or bad, support a party's case) or will result in the court not having the full information. Here, there was no indication of that; the expert had resigned due to ill-health, and the judge was satisfied that disclosure of her draft report would not add anything in circumstances where each party would have evidence from an expert in which it had confidence.

Some other first instance decisions have taken what is arguably a different approach, requiring disclosure despite there being no strong indication of expert shopping – in BMG (Mansfield) Ltd v Galliford Try Construction Ltd [2013] EWHC 3183 (TCC) (considered here) where the expert was almost 70 and did not want to continue acting, and in Allen Tod Architecture Ltd v Capita Property and Infrastructure Ltd [2016] EWHC 2171(TCC) (considered here) where the party had lost confidence in the expert because he was unable to express his views clearly.

As a practical matter, therefore, parties who wish to change experts, and who need the indulgence of the court to be able to do so, should assume that they may need to disclose any previous reports (or draft reports or other documents setting out the previous expert's views) as the "price" of that indulgence – though the court may decide otherwise in an appropriate case, as this case demonstrates.

Rachel Lidgate and Anthea Brookes, a partner and an associate in our dispute resolution team, consider the recent decision further below.

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CJEU limits situations in which insolvency laws relating to transaction avoidance may override Parties’ contractual choice of law

In a recent judgment, the Court of Justice of the European Union (CJEU) confirmed the extent to which an English law governed contract can be subject to the transaction avoidance provisions of the insolvency law of other another member state if one of the counterparties enters into insolvency in that member state (eg Italy): Vinyls Italia SpA v Mediterranea di Navigazione SpA C-54/16 (8 June 2017).

The decision should give some comfort to those dealing with a counterparty in another EU jurisdiction, where they have chosen some other law to govern their contract (eg English law); the upshot is that they should not be exposed to the (potentially very strict) transaction avoidance rules that may apply on insolvency in the counterparty's jurisdiction, so long as the transaction would not be subject to challenge under the law of the contract. However, a party may be subject to the procedural laws of the counterparty's jurisdiction, which may introduce strict time limits or rules of evidence for those seeking to protect their rights.

The court reached that result under the EU insolvency regime alone and without reference to the main EU instrument on the choice of law applicable to contractual obligations (the Rome I Regulation).

John Whiteoak, a partner, and Andrew Cooke, a senior associate, in our contentious restructuring, turnaround and insolvency practice, consider the decision below.

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Court of Appeal clarifies when parties are dealing on written standard terms of business so that the UCTA reasonableness test will apply

The Court of Appeal has upheld an order for summary judgment for sums due under a facility agreement which was based on a Loan Market Association (LMA) model form. It rejected the defendants' argument that (i) the parties were dealing on the lenders' written standard terms of business and therefore (ii) a term in the facility agreement that prohibited set-off needed to satisfy the reasonableness requirement under the Unfair Contract Terms Act 1977 (UCTA): African Export-Import Bank v Shebah Exploration & Production Company Ltd [2017] EWCA Civ 845.

The court held that, in determining whether parties are contracting on standard terms of business, it is not sufficient that the terms derive from the use of a model form. The essential questions are:

  • whether the relevant party habitually uses those terms; and
  • whether there have been more than insubstantial variations to the terms.

The decision suggests that, where a party habitually uses a standard form document but its terms are then negotiated, it is unlikely to be seen as contracting on standard terms for the purpose of UCTA, at any rate where the negotiations result in "more than insubstantial variations" to that standard form. Each case will however turn on its facts.

The decision may be seen as casting doubt on the recent High Court judgment in Commercial Management (Investments) Ltd v Mitchell Design and Construct Ltd [2016] EWHC 76 (TCC) (considered here) which suggested that parties could be contracting on standard terms even if the standard terms comprised only a small proportion of the terms of the contract – although its precise impact on that decision is not clear.

Daniel Woods, an associate in our dispute resolution team, considers the decision further below.

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New provisions for concurrent expert evidence or “hot-tubbing”

The Civil Procedure Rule Committee has approved amendments to Practice Direction 35.11, which governs the procedure for concurrent expert evidence, or "hot-tubbing", which was formally introduced into English civil procedure by the Jackson reforms. 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.

The new PD reserves the term "concurrent expert evidence" solely for hot-tubbing, in contrast to the CJC report which had used it as an umbrella term to encompass a number of other methods of giving oral expert evidence, including evidence on an issue-by-issue basis (where all parties' experts give their evidence in relation to a particular issue, before moving on to the next issue). The PD does however expressly recognise these other methods; it provides that, to the extent evidence is not given concurrently, the court may direct it to be given in any appropriate manner, including on an issue-by-issue basis.

Maura McIntosh has published a post on Practical Law’s Dispute Resolution blog which outlines the new provisions. Click here to read the post (or here for the Practical Law Dispute Resolution blog homepage).

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Employee could not assert privilege against employer over documents on employer’s IT system

The High Court has found that a company's Group Finance Director could not assert privilege against the company in respect of documents he had created for the purpose of obtaining legal advice in respect of his divorce proceedings, which the company had found on its computer systems. The documents were not confidential as against the company, as the claimant did not have a reasonable expectation of privacy in respect of the documents: Simpkin v The Berkeley Group Holdings PLC [2017] EWHC 1472 (QB).

The decision suggests that where documents are created and/or stored on an employer's IT systems, and subject to its IT policy, the employee may not be able to assert privilege as against the employer in respect of those documents. The court distinguished a similar High Court decision, Shepherd v Fox Williams [2014] EWHC 1224 (QB), as in that case the privilege belonged to a third party (the employee's girlfriend) who was not subject to the employer's IT policy.  

In the present decision the court notes that the relevant documents were not password protected or segregated from the claimant's work related documents, and did not indicate on their face that they were privileged. It is not clear whether the decision would have been different had such factors been present. 

The decision illustrates that employees who create or store documents on IT systems controlled by their employer may not be able to assert privilege against that employer. Employers should not however assume that they will always be entitled to use such material – as noted above, the position may be different if steps are taken to indicate that the documents are confidential to the employee, for example if they are password protected or stored in a private folder separate from the employee's work documents.

The decision also contains interesting comments on when the court will exercise its discretion to restrain an opponent from using confidential and privileged documents which have come into its hands, and on the dangers of referring to privileged documents even for the purpose of supporting a claim to privilege.

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Filed under Confidentiality, Privilege

Supreme Court clarifies principles for determining when benefits enjoyed by a claimant following a breach of contract will be treated as collateral

The Supreme Court has ruled that the owners of a ship that was redelivered early in breach of a charterparty did not have to give credit for the benefit they obtained by selling the vessel for a higher price upon its early redelivery, rather than at the end of the contractual term of the charterparty when the vessel was worth significantly less: Globalia Business Travel SAU (formerly TravelPlan S.A.U) of Spain v Fulton Shipping Inc of Panama [2017] UKSC 43. In doing so, the Supreme Court overturned the unanimous decision of the Court of Appeal and re-instated the order of the High Court, which had itself disagreed with the tribunal's ruling on this issue in the underlying arbitration.

The Supreme Court's decision lays down an important precedent and establishes that there is no straightforward litmus test to determine whether a benefit enjoyed by an innocent party will be taken into account to reduce the damages payable following a breach of contract, or alternatively treated as a collateral benefit which is ignored for these purposes. The key question will be whether the benefit was caused either by the breach or by the innocent party's act of mitigation, taking into account all the circumstances.

If no such causation is found, recoverable loss will not be reduced by the benefit. Importantly, it will not satisfy the causation test if the breach merely provided the occasion or context for the innocent party to obtain the benefit, nor is it sufficient that the benefit would not have been obtained but for the breach. Determining causation in this sense is not a straightforward question, and reasonable views may differ – as illustrated by the opposite conclusions reached in unanimous decisions of the Court of Appeal and Supreme Court in this case.

Donny Surtani and Charlotte Benton, a partner and associate in our dispute resolution team, consider the decision further below.

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High Court refuses non-party access to witness statements prepared for trial and referred to at pre-trial hearing

The High Court has refused an order allowing The Sunday Times to obtain access, in advance of a trial, to witness statements prepared for that trial, even though the statements had been placed before the judge and referred to at a pre-trial hearing: Blue v Ashley & The Times Newspapers Limited [2017] EWHC 1553 (Comm).

The decision suggests that the court will not generally make witness statements prepared for use at a trial publicly available before the witness gives evidence. Although the position is different where the statements have been placed before the judge and referred to at a pre-trial hearing (disclosure will usually be ordered in those circumstances), there is still a need for the court to consider the particular circumstances, including (importantly) the non-party's purpose for seeking access. Where that purpose is simply a wish to report on the evidence witnesses will give at trial before the trial starts, that is unlikely to be sufficient.

Maria Clarke, a senior associate in our dispute resolute team, considers the decision further below.

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Filed under Confidentiality, Evidence

EU clarifies negotiating position on choice of law, jurisdiction and enforcement of judgments post-Brexit

Yesterday (29 June) the European Commission published its Position Paper on Judicial Cooperation in Civil and Commercial Matters which outlines its position on the extent to which current EU rules on choice of law, jurisdiction and enforcement of judgments should continue to apply as between the UK and the EU27 post-Brexit. In broad summary, the key points are that:

  • Choices of law and jurisdiction in contracts entered into before the withdrawal date should continue to be given effect in accordance with current rules.
  • Current provisions on jurisdiction (ie those which apply in the absence, or regardless, of contractual choice) should continue to apply to all proceedings instituted before the withdrawal date.
  • Current provisions on the law applicable to contractual and non-contractual obligations (ie those which apply in the absence, or regardless, of contractual choice) should continue to apply to contracts concluded before the withdrawal date, and (regarding non-contractual liability) to events which occurred before the withdrawal date.
  • Current provisions on recognition and enforcement of judgments should continue to govern all judicial decisions given before the withdrawal date.

For more information see this post on our Brexit Notes blog.

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Filed under Choice of law, Enforcement, Jurisdiction

Court of Appeal confirms good reason required to depart (up or down) from costs budget

The Court of Appeal has recently delivered an important judgment on the relationship between the costs budgeting regime and the costs that are ultimately awarded to a successful party in litigation: Harrison v University Hospitals Coventry & Warwickshire NHS Trust [2017] EWCA Civ 792.

A number of costs assessments had been put on hold pending the outcome of this appeal, which was referred directly to the Court of Appeal from the Senior Courts Costs Office on a "leapfrog" basis.

The Court of Appeal considered the meaning of CPR 3.18 which provides that, in assessing costs on the standard basis, the court will not depart from the receiving party's last approved or agreed budget for each phase of the proceedings unless satisfied that there is good reason to do so. The main issue in this appeal was whether good reason was required before a court could award a lower amount than budgeted. It concluded that good reason had to be shown for any departure, upwards or downwards, from an approved costs budget. However, the court held that this requirement did not extend to the court's assessment of costs incurred before the date of the budget, as these did not form part of the approved budget.

Two key impacts for litigants are: (i) it should be easier than it would otherwise have been for a successful party to obtain full recovery of legal costs falling within an approved or agreed budget; but (ii) the same does not apply to recovery of costs incurred pre-budget, where there is no requirement for good reason to depart from the figure put forward at the budget stage.

Francesca Ruddy, an associate in our dispute resolution team, considers the decision further below.

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