James Farrell and Maura McIntosh have published an article in PLC Magazine which considers the courts’ tough new stance on compliance with rules and orders, as illustrated by recent Court of Appeal decisions, and looks at the practical implications of this new approach. Click here to download a pdf.
Court of Appeal rules on factors to be taken into account when setting fines for breaches of environmental and health and safety law
In a judgment that will be of interest to all businesses that may find themselves defending health and safety or environmental prosecutions, but particularly to larger businesses (defined by the court as those with annual turnover over £1 billion), the Court of Appeal has upheld substantial fines imposed on two large corporate defendants: R v Sellafield Ltd; R v Network Rail Infrastructure Ltd  EWCA Crim 49. The court reviewed the public policy considerations that a judge must take into account when setting the level of such fines and indicated that, in future, the courts will look much more closely at the defendant company’s financial circumstances, corporate structure and director remuneration. Click here for our Health and Safety e-bulletin on the decision.
On Thursday 23 January the government introduced the Consumer Rights Bill to Parliament. The Bill includes proposals for a new collective action for competition claims, together with other proposals for reforming the UK regime for competition law private actions. This follows initial publication of the government’s proposals in January 2013 (see post) and the draft Bill in June 2013.
If passed by Parliament, the Bill will create a new “opt-out” collective action for competition law claims on behalf of both consumers and businesses in the Competition Appeal Tribunal (CAT). The CAT will be required to certify whether an action should proceed on an opt-in or (for UK-domiciled claimants) opt-out basis. With an opt-in action, as the name suggests, claimants need to opt in if they wish to benefit from the claim. In contrast, with an opt-out action, the claim is brought on behalf of a defined group, without the need to identify individual group members; all those who fall within the group will be bound by the result (including a settlement) unless they opt out of the case.
In terms of who will be able to act as a representative to bring an opt-out collective action, this includes any claimants (individuals or businesses) who have suffered a loss, as well as genuinely representative bodies such as trade associations. However, a person may only be authorised to act as a representative in proceedings if the CAT considers it ”just and reasonable” for that person to do so – even if they are a class member. In the draft Bill the “just and reasonable” requirement applied only if the proposed representative was not a class member.
The Bill also includes a new opt-out collective settlement regime, similar to the Dutch mass settlements regime. This will allow parties to ask the CAT to approve an agreed settlement on an opt-out basis (for UK-domiciled claimants) without the need for a claim to be brought.
US Supreme Court rejects jurisdiction over foreign corporation based on its subsidiary’s contacts with the forum
For the first time ever, the United States Supreme Court has addressed whether a foreign corporation may be subjected to a court’s general jurisdiction based on its subsidiary’s contacts with the forum state: Daimler AG v. Bauman, No. 11-965, 2014 WL 113486 (U.S. Jan. 14, 2014). Rejecting the exercise of jurisdiction, the Court held that a foreign company was not subject to general jurisdiction in California, based on its domestic subsidiary’s activities in the state, on a claim arising out of events that all took place outside the United States.
Moreover, the Court went out of its way to delineate substantial limits on courts’ ability to exercise general jurisdiction over corporate defendants. General jurisdiction subjects a defendant to a lawsuit in the forum based on activities conducted anywhere, even outside the forum. The Court’s decision in Daimler makes clear that the assertion of general jurisdiction over a foreign corporate defendant, for conduct not directed at the forum, presents a difficult challenge for plaintiffs. David Wallace and Garrett Kamen of our New York office consider the decision further below. Continue reading
For many years, plaintiffs in United States courts have sought to avoid established limits on tort claims, and to recover compensation even when traditional elements of a claim are absent. One variant of this effort has been the assertion of claims for medical monitoring, in which plaintiffs seek to recover medical expenses incurred in tracking health, despite the absence of a present injury. This theory is typically used to seek recovery of the future costs of medical testing needed to diagnose latent diseases that may be caused by exposure to a harmful substance, rather than compensation for an existing condition. Some US courts have allowed these claims to proceed, reasoning that the claim enables tort victims to detect and obtain treatment for latent disease at the earliest possible time. Other courts have refused to recognise the theory, adhering to the traditional principle that the lack of a current injury bars the claim. Click here to read more about this on our product liability blog.
High Court finds damages not an inadequate remedy due to contractual limitation clause and refuses interim injunction
The High Court has refused to grant an interim injunction, holding on the basis of prior authority that a limitation clause excluding certain heads of liability did not mean that damages would be an inadequate remedy: AB v CD  EWHC 1 (QB).
However, the judge (Stuart-Smith J) admitted a “degree of unease at the result” and a concern that his approach may be “too inflexible in a case such as the present”. He therefore granted permission to appeal. Neil Blake and Anna Bond consider the decision further below. Continue reading
The Court of Appeal has overturned an order granting a second application for relief from sanctions for failure to comply with an unless order, with the result that the defendant is debarred from defending the claim: Thevarajah v Riordan  EWCA Civ 15.
This decision continues the court’s tough line on compliance with rules and court orders, as established in the widely publicised Mitchell decision (see post) and subsequently applied in Durrant (see post). It shows in particular that where a party has been denied relief from sanctions, it will be very difficult to persuade the court to grant a second bite at the cherry. Where the second application for relief entails setting aside provisions of a previous order refusing relief (as will usually be the case), the court will not normally grant such an application unless there has been a material change of circumstances since the order was made, or the original decision was based on misstated facts, or there was a manifest mistake in formulating the order and, in any case, the application was made promptly. The decision also suggests that belated compliance with the rule or order breached will not ordinarily amount to a material change of circumstances for these purposes. Continue reading
In the latest decision illustrating the court’s strict approach when applying the test for litigation privilege, the Commercial Court has rejected a defendant’s claim to privilege over reports prepared by third parties (a bank and a firm of accountants) regarding a potential entitlement to deferred consideration following a business sale: Starbev GP Ltd v Interbrew Central European Holding BV  EWHC 4038 (Comm).
In relation to the bank documents, the court held that litigation was not in reasonable prospect at the time of preparation. The bank was instructed to investigate what were mere suspicions on the part of the defendant; unless and until that investigation confirmed there was substance to the suspicions, there was no real reason to anticipate litigation. In relation to the accountants’ report, the defendant had not established that it was for the dominant purpose of the litigation. That was in part because the report had been commissioned and the underlying work completed at a time when litigation was not (as the court concluded) in reasonable prospect; the court did not accept that the purpose of the report had been transformed by an instruction to put the conclusions in writing, even if litigation was in reasonable prospect by that later stage.
The key message is to consider and record, at the stage a report is commissioned, whether litigation is contemplated and (if this is the case) that it is the purpose of the report. Such a statement will not be definitive but may assist in evidencing the required elements for litigation privilege. As ever, if there is any room for doubt, the safest course is to assume that the report will not be covered by litigation privilege. Continue reading
In what appears to be the first High Court decision applying the court’s new express powers to limit factual witness evidence, the court has restricted the number of witnesses that may be called by a claimant in relation to particular issues in a personal injury case: MacLennan v Morgan Sindall (Infrastructure) Plc  EWHC 4044 (QB). Continue reading
A review of current practices and procedures for the conduct of business in the Chancery Division, known as the “Chancery Modernisation Review”, has been undertaken over the past year led by Lord Justice Briggs. The final report was published on Tuesday and puts forward more than 100 recommendations, many of which were foreshadowed in a provisional report published for consultation in July. The report has been welcomed by the Chancellor of the High Court, who commissioned the report. Steps will presumably now be taken toward implementing the recommendations, though the report notes that full implementation is dependent on improvements to IT provision which are currently being addressed by the courts service. Key recommendations include:
- Increased use of full docketing, i.e. case management and trial by the same judge.
- A move to fixed length trials.
- The strict focus of case management for trial upon the issues in the case.
- Convergence in practice and procedure between courts doing similar work.
- The provision of better access to justice for litigants in person.