Interim report published in Civil Courts Structure Review

Lord Justice Briggs's interim report in his review of the future of the civil courts structure was published yesterday, 12 January 2016. Key aspects include:

  • Urgent measures are needed to address the current overload in the Court of Appeal, where a 54% increase in work coming in to the court (principally, applications for permission to appeal) has led to massive delays in listing appeal hearings. Proposals are already due to be presented to the Court of Appeal in March 2016, with options including the greater use of two judge courts, increased deployment of deputies, transfer of classes of appeal to the High Court, raising the thresholds for permission to appeal, and reducing or removing the right to an oral renewal of a permission application. The interim report notes that the urgency of the problem means decisions in principle are likely to have been taken before the review is complete, but views are welcome as part of the consultation nonetheless.
  • An Online Court should be created for claims up to £25,000, to give effective access to justice without the need for lawyers. Cases would progress through three stages: (i) a largely automated, inter-active online process to identify the issues and provide documentary evidence; (ii) conciliation and case management by case officers; (iii) resolution by judges.
  • Some of the more routine and non-contentious work currently carried out by judges should be transferred to case officers supervised by judges. This is likely to include matters which are not actively disputed, and some routine case management of less complex cases, but not decisions affecting substantive rights and duties. A case officer’s decision could be re-considered by a judge.
  • There should not be a move to a unified civil court (ie combining the High Court and County Court) ahead of the implementation of the Reform Programme. The review will however explore possible changes to the boundaries between the High Court and the County Court, including potentially raising the lower limits for the issue of claims in the High Court, as well as looking at the current divisional structure of the High Court and in particular the "sensitive subject" of whether there should be a merger of the Rolls Building courts (ie Chancery, the Commercial Court and the Technology and Construction Court). 
  • There would be real advantages in unifying procedures for enforcement of civil judgments in the High Court and County Court.

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Supreme Court decision confirms second attempt at relief from sanctions will be uphill battle

The Supreme Court has upheld the Court of Appeal's decision overturning the grant of a second application for relief from sanctions for failure to comply with an unless order: Thevarajah v Riordan [2015] EWCA Civ 14 (and see our blog post on the Court of Appeal's decision).

The second application for relief was, in substance, an application under CPR 3.1(7) to vary or set aside the previous order refusing relief. Therefore, applying established principles, it should not have been granted unless there had been a material change of circumstance since the previous order was made.

Interestingly, the Supreme Court commented that, even if CPR 3.1(7) did not apply, it would not normally be open to a party to ask for relief from sanction which required a previous interlocutory order to be varied or set aside unless there had been a material change of circumstance since the order was made. The impact of the Supreme Court's decision may therefore extend more widely than to second applications for relief from sanctions.

In terms of what might amount to a material change of circumstance, the decision confirms that the mere fact an order has been complied with, albeit late, will not ordinarily be sufficient. However, the court did not rule out the possibility, particularly where late compliance is accompanied by an explanation as to why the party could only comply belatedly. 

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Government rows back from plans to double cap on court issue fees

The government has today published its response to its recent consultation on further court fee increases. The good news for court users is that it has decided not to proceed with plans to increase the cap on fees to issue a money claim, which are currently calculated at 5% of claim value subject to a £10,000 cap following significant increases in March 2015. In its consultation, the government had proposed to increase the cap to "at least" £20,000, and invited views on whether there should be a higher cap or no cap at all (see post). 

Today's response notes that these proposals attracted a high level of criticism from respondents to the consultation. It states that the government has taken account of these concerns, in particular the criticism that there has not been sufficient time to understand the impact of the March 2015 increases. However, it goes on to say that in view of the financial position, and the need to ensure the proper funding of the courts, the government does not rule out returning to this proposal in future, once it has had more time to assess the impact of the previous increases. So today's announcement may not be the last word.

The government is however planning to implement a number of fee increases, even if it is not going ahead with the headline proposals. These include:

  • Fee increases of 10% across the range of civil proceedings, including enforcement proceedings and determination of costs proceedings.
  • Introducing fees for the first time in the General Regulatory Chamber and the Tax Chamber of the First-tier Tribunal and in the Upper Tribunal Tax and Chancery Chamber.
  • Introducing fees of £100 to issue proceedings in the Property Chamber and £200 for a hearing for most cases.

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Jackson reforms will apply to insolvency litigation from April 2016

The government has today announced that the insolvency exception to the Jackson reforms will come to an end in April next year. This means that CFA success fees and ATE insurance premiums will no longer be recoverable in proceedings brought by liquidators, administrators, trustees in bankruptcy, and companies in liquidation or administration. The change will bring insolvency proceedings into line with other types of claim, where recoverability was abolished from April 2013.

When the Jackson reforms were implemented in April 2013, the government announced that there would be a two year delay for insolvency litigation. This was to give insolvency practitioners and other interested parties time to prepare for and adapt to the changes. The exception was due to end in April this year, but in February the government announced it would continue “for the time being” and the government would set out further details later in the year (see post). In October, Lord Justice Jackson delivered a lecture arguing that the exception should come to an end (see post). 

The government's announcement does not give reasons for the change, simply saying that after further consideration the government has decided the reforms should be applied to insolvency proceedings.

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Court of Appeal underlines high hurdle to overturn decisions re strike out or relief from sanctions

The Court of Appeal has dismissed an appeal against a High Court decision refusing to strike out a claim for procedural failures even though, in the judge's position, it would have struck a different balance between the competing factors: The Commissioner of Police for the Metropolis v Abdulle & Ors [2015] EWCA Civ1260.

The decision emphasises that the court will not lightly interfere with a case management decision, whether that is to grant or refuse relief from sanctions or to grant or refuse an application to strike out a claim. 

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A litigator’s yearbook: 2015 (England and Wales)

In this post we look back at some of the key developments of 2015 from the perspective of the commercial litigator, covering a range of topics including contract law, privilege, settlement, jurisdiction and various aspects of court procedure. We hope you will find something of interest, whether you just want a reminder of developments in a few areas, or you're trying to catch up on a year that's flown by.

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Article published on jurisdiction rules applying to claims against directors

A recent decision of the CJEU has considered a number of jurisdiction questions which have significant implications for claims against directors who are also employees of a company.

Andrew Taggart, Anna Pertoldi and Donny Surtani have published an article which considers when the special employment jurisdiction rules in the Brussels Regulation will apply to claims against directors: "Claims against directors under the Brussels Regulation". Click here to download a PDF of the article, which first appeared in the December 2015/January 2015 issue of the Employment Law Journal.

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Supreme Court confirms that company directors’ powers must be exercised for a proper purpose

In an important decision which will impact upon corporate disputes, the Supreme Court has confirmed that the exercise of an apparently unfettered discretionary power given to directors under the articles of association of a company must only be exercised for a proper purpose: Eclairs Group Limited v JKX Oil & Gas Plc [2015] UKSC 71.

The decision is likely to be particularly relevant to battles for control of a company in circumstances where the directors may have allegiance to a particular shareholder group. In this context, the exercise of a discretionary power by directors is more commonly attacked on the basis that it does not best promote the success of the company (often a matter of subjective belief as to the business interests of the company). However, the present decision affirms the availability of another line of attack, based on the proper purpose of the power.

Gary Milner-Moore and Andrew Cooke, a partner and associate respectively in our dispute resolution team, consider the judgment below, and look at what this may mean for future battles for control.

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Supreme Court clarifies test for implying terms into a contract

In a judgment handed down yesterday morning, the Supreme Court has clarified the law on when the court can imply a term that the parties have not expressly included in their contract, endorsing the traditional approach that the term either must be so obvious as to go without saying or must be necessary to give business efficacy to the contract: Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Limited and another [2015] UKSC 72.

The decision considers the Privy Council decision in Attorney General of Belize v Belize Telecom [2009] 1 WLR 1988, which had generally been accepted as the leading modern case on the implication of terms. In that case, Lord Hoffmann suggested that the process of implying terms was part of the exercise of contractual construction, so that the only question was whether a reasonable reader of the contract, with the relevant background knowledge, would understand it to be implied. That decision led to a great deal of academic debate as to whether it had changed the law, so that reasonableness could now be seen as a sufficient ground for implying a term.

In the present decision, the Supreme Court is unanimous in emphasising that Belize Telecom should not be taken as having watered down the traditional, highly restrictive approach to the implication of terms. The upshot of the decision is that reasonableness in itself is not sufficient; the tests of obviousness or business efficacy must be met. There is however some disagreement between the Supreme Court Justices as to how Belize Telecom should be treated going forward. Natasha Johnson, a partner in our dispute resolution team, considers the decision below.

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No litigation privilege where witnesses were deceived as to true purpose of meetings

The High Court has rejected a claimant's claim to assert litigation privilege over secret recordings of meetings with potential witnesses (who were former employees of the defendant), because the witnesses were deceived into believing that the meetings were to discuss business opportunities rather than evidence for litigation: Property Alliance Group v The Royal Bank of Scotland PLC [2015] EWHC 3341 (Ch).

The court held that the meetings were not for the dominant purpose of litigation, which is an essential requirement for the protection of litigation privilege. Ordinarily, where a solicitor arranges a meeting with a potential witness to take a proof of evidence, the discussions (and any record of them) will be privileged as they are for the dominant purpose of gathering evidence for use in litigation – regardless of whether the witness has some other motive for agreeing to meet. However, the court held that the present case was different because of the deception practised on the witnesses.

The decision illustrates that the court will not look favourably on efforts to obtain evidence by deceiving potential witnesses as to the purpose of discussions and, depending on the circumstances, may deny the protection of litigation privilege to records of such discussions. James Norris-Jones and Maura McIntosh, a partner and professional support consultant in our disputes team, consider the decision further below.

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