Claimants who settled on “no costs” basis held liable for costs through back door

In circumstances where two claimants had settled their claims against the defendant on a “no costs” basis and a third claimant had continued to trial and lost, the Court of Appeal held that the settling claimants should contribute to the defendant’s costs payable by the continuing claimant for the period in which they had all advanced the same (unsuccessful) case: Dufoo v Tolaini [2014] EWCA Civ 1536. The settling claimants should not however be required to contribute to costs for the period after they had fallen out with the continuing claimant and served separate pleadings, or after they had settled.

The decision is an important reminder for claimants who are considering going it alone with a settlement while their fellow claimants continue the action. Even if the terms of settlement prevent the defendant seeking costs against the settling claimants, they may still end up with a costs liability through the back door. So unless the defendant will agree to an indemnity against such liability, this is a factor that should be taken into account in weighing up the benefits of the settlement. Continue reading

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Court of Appeal explores ambit of the without prejudice rule

The Court of Appeal has recently held that certain correspondence marked “without prejudice” was admissible in evidence despite this label, because there was no dispute between the parties at the time of the correspondence and the parties had not agreed that the without prejudice rule should apply in any event: Avonwick Holdings Limited v Webinvest Limited & Anor [2014] EWCA Civ 1436.

The decision is a reminder that marking a communication “without prejudice” is not conclusive as to whether the rule will apply. It is also of interest in suggesting that parties can, notwithstanding the lack of a dispute, expand the ambit of the without prejudice rule by agreement, so that communications which would not normally be covered by the rule are rendered inadmissible as evidence in potential future proceedings. It is not clear how far such a principle might apply to stretch the protection beyond its generally recognized ambit, i.e. communications aimed at settlement of a dispute between the parties.

Gregg Rowan and Alex Sharples consider the decision further below. Continue reading

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Court of Appeal confirms time for claiming contribution to damages runs from acceptance of Part 36 offer

The Court of Appeal has held that, where a claim was settled by acceptance of a Part 36 offer, the defendant’s two-year limitation period for bringing a contribution claim ran from the date of acceptance, not from the date of subsequent consent orders embodying the settlement agreement and quantifying costs: The Chief Constable of Hampshire Constabulary v Southampton City Council [2014] EWCA Civ 1541.

Although there is some uncertainty as to whether the same would necessarily hold true if the consent order had been worded differently, or if the settlement had been reached outside the Part 36 machinery, the case gives a clear message for defendants who wish to claim a contribution toward an agreed damages payment: the claim should be issued (well) within two years of the earliest possible date on which a concluded agreement might be said to have arisen. Continue reading

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New EU jurisdiction rules apply from 10 January: Do you know where you can sue and be sued?

New EU rules on jurisdiction and the enforcement of judgments will apply to proceedings commenced from 10 January 2015, in the form of the recast Brussels Regulation (Regulation (EU) 1215/2012). Though similar in most respects to the original version of the Regulation it replaces, the recast Regulation includes some significant changes. The key practical implications for parties based both within and outside the EU are outlined below under the following headings:

(You can click here for a copy of our recently published “Handy client guide to jurisdiction under recast Brussels Regulation: England and Wales”. The guide features a decision tree, which is intended as a quick reference guide to help determine whether the English court will have jurisdiction over a dispute under the new rules.)  Continue reading

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UK Supreme Court: merits generally irrelevant to enforcement of case management directions

In a judgment given yesterday (26 November) the majority of the Supreme Court has expressed the view that the strength of a party’s case on the merits is generally irrelevant to enforcement of the court’s case management directions, save perhaps where the case is strong enough to obtain summary judgment: HRH Prince Abdulaziz Bin Mishal Bin Abdulaziz al Saud v Apex Global Management Ltd and another [2014] UKSC 64.

In this case the Court dismissed an appeal against decisions striking out a Saudi prince’s defence to a US$6 million claim for refusing to comply with an order that he personally sign a statement of truth in a disclosure statement. The Court rejected the Prince’s argument that preventing him from challenging the claim was a disproportionate sanction for his non-compliance, and that the alleged strength of his claim should be taken into account in determining the appropriate sanction.

The decision is interesting as a rare foray by the Supreme Court into the territory of case management decisions, though the Court was careful to point out that issues of case management and the application of the Civil Procedure Rules are primarily a matter for the Court of Appeal. In particular, the Court stated that nothing in its judgment was intended to impinge on the decisions or reasoning of the Court of Appeal in the Mitchell or Denton cases (see post).

Although the Court of Appeal’s decision in Denton marked a retreat from the post-Mitchell extremes, resulting in a less draconian approach to enforcement of court rules and orders, Denton continued to emphasise the need for strict compliance, pointing out that there was to be no return to the “traditional approach of giving pre-eminence to the need to decide the claim on the merits” . The Supreme Court’s decision in the present case may be seen as reinforcing that approach.

The decision is also of interest for the Supreme Court’s view (in agreement with the High Court and the Court of Appeal) that a disclosure statement must normally be signed personally by a party to the action, though the court can permit a departure from that approach. Continue reading

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Filed under Disclosure, Interim applications

Our new “Handy client guide to jurisdiction under recast Brussels Regulation: England and Wales”

JurisdictionguideIn light of the upcoming changes to the EU rules governing jurisdiction and the enforcement of judgments, which will apply to proceedings commenced from 10 January 2015, we have published a new client guide to the English court’s jurisdiction under the recast Brussels Regulation (No 1215/2012). The guide features a decision tree, which is intended as a quick reference to help determine whether the English court will have jurisdiction over a dispute under the new rules.

The guide is available as an interactive PDF by clicking on the image to the right, or via the “jurisdiction guide” tab on the top menu. Or click here for a printer-friendly version.

In broad outline, the main areas of reform under the recast Brussels Regulation are:

  • extending the rules relating to jurisdiction agreements and defusing “torpedo” actions
  • clarifying the extent and effect of the exclusion of arbitration from the ambit of the Regulation
  • new rules on stays in favour of proceedings in a non-member state
  • extending the rules relating to consumers and employees to apply to non-EU domiciled traders and employers
  • making Member State judgments immediately enforceable across the EU

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Court has broad discretion to order costs budgeting in cases falling outside mandatory regime

The High Court has considered the extent of the court’s discretion to order costs budgeting in cases where budgets are not automatically required. Under the rules in force since 22 April 2014, that means claims for more than £10 million, though in this case the relevant threshold was £2 million as it was a claim filed in the Technology and Construction Court before that date: CIP Properties (AIPT) Ltd v Galliford Try Infrastructure Ltd & Ors [2014] EWHC 3546 (TCC).

Unsurprisingly, the judge (Coulson J) rejected the claimant’s argument that the court had no discretion to apply costs budgeting in cases falling within the exceptions to the mandatory regime, saying he was in no doubt that the court has such a discretion. Although the decision relates to the construction of the rules in place before 22 April, the judge’s reasoning would lead to the same result under the new regime.

He also rejected the claimant’s fallback argument that there was a presumption that budgets would not be ordered in cases falling within the exceptions, so that the party seeking an order for budgets must demonstrate special circumstances justifying the exercise of the discretion. On the contrary, the court has an unfettered discretion and must weigh up all the circumstances of the case to decide whether the order should be made.

Whilst only first instance, the decision is of particular significance given Coulson J has been closely involved in developments relating to costs budgeting, having led the review that considered whether the original exceptions (for cases above £2 million in TCC and Chancery and all cases in the Commercial Court) should be removed and having given a number of previous decisions which take a fairly strict approach to budgets (see herehere and here).

The decision also considers the benefits (or otherwise) of ordering a stay or ‘window’ in trial preparation to allow for ADR – see this post on our ADR notes blog for more on that aspect.

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UK Supreme Court considers proper approach to awarding compensation for breach of trust in a commercial context

The Supreme Court has confirmed that equitable compensation for breach of trust in the context of a commercial transaction, and in the absence of fraud, should reflect the claimant’s actual loss resulting from the breach. It should not extend to losses the claimant would have suffered even if there had been no breach: AIB Group (UK) plc v Mark Redler & Co Solicitors [2014] UKSC 58.

In breach of trust, solicitors acting for a lender (AIB) failed to discharge a prior mortgage held by Barclays before releasing the mortgage advance to the borrowers. The borrowers defaulted some years later, when the secured property realised £1.2 million on sale (of which approximately £300,000 had to be paid to Barclays). AIB sued the solicitors, claiming its £3.3 million mortgage advance minus the sale proceeds it had received. The Supreme Court held that the solicitors were liable only for the amount paid to Barclays for its prior security, not for loss attributable to the fall in the value of the property – that loss would have been suffered regardless of the breach of trust.

The decision should give some comfort to financial institutions and others who may take on the role of trustee in commercial transactions, as it suggests their liability for a (non-fraudulent) breach of trust is unlikely to be radically different from their liability in contract or tort. Gary Milner-Moore and Andrew Cooke comment on the decision below. Continue reading

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Filed under Damages, Miscellaneous

Upcoming webinar – The recast Brussels Regulation: what it means for commercial parties

The EU rules governing jurisdiction and enforcement of judgments will change significantly from 10 January 2015, when the recast Brussels Regulation (No 1215/2012) will apply in place of the current regime. 

On Wednesday 19 November, at 12.45 – 1.45pm GMT, Adam Johnson, Nick Peacock and Anna Pertoldi will deliver a webinar for Herbert Smith Freehills clients and contacts which will consider the key changes and their impact on commercial parties in practice, including a look at the problems addressed by the new rules and a discussion of where uncertainties remain. In broad outline, the main areas of reform are:

  • extending the rules relating to jurisdiction agreements and defusing “torpedo” actions
  • clarifying the extent and effect of the exclusion of arbitration from the ambit of the Regulation
  • new rules on stays in favour of proceedings in a non-member state 
  • extending the rules relating to consumers and employees to apply to non-EU domiciled traders and employers
  • making Member State judgments immediately enforceable across the EU

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Mitchell decision considers court’s approach to admitting evidence of “similar facts”

Parties to litigation sometimes wish to rely on evidence of similar but unconnected past incidents, arguing that what happened then is a good indicator of what happened in the case in question. Such evidence of “similar facts” is tightly controlled in criminal cases, but the test for its admission in civil cases is less stringent.

A recent decision in the high profile Mitchell “plebgate” case illustrates the court’s approach. Here the court agreed to admit evidence of Mr Mitchell’s past encounters with police which, if true, might throw light on his attitude and reaction when impediments were placed in his way by police officers and therefore support the defendant’s case: Mitchell v News Group Newspapers Ltd [2014] EWHC 3590 (QB).

That is not to say that similar fact evidence will always be admitted in civil cases. The court must balance the probative value of the evidence against any potential unfairness it might cause, as well as the additional burdens in case management terms. Where the balance lies will depend on the circumstances in each case.

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