Party could not enforce contractual right to recover overpayments where established convention to charge on non-contractual basis

The High Court held that a social landlord was estopped from deducting overpayments it had made to a contractor, according to the contractual pricing and payment mechanism, from later payments to the contractor. The decision illustrates some of the problems that can arise where parties act in a manner that is not consistent with the strict terms of their agreement: Mears Limited v Shoreline Housing Partnership Limited [2015] EWHC 1396 (TCC).

While the original tender documents and the contract between the parties allowed for one pricing and payment mechanism, the parties operated a different pricing and payment mechanism from when work began (six months before the contract was executed) for a period of about seven months. The employer claimed that this resulted in overpayments being made to the contractor and sought to recover these overpayments.

The court held that the employer was prevented from recovering the overpayments by the doctrines of estoppel by convention and estoppel by representation. It did not matter that the contract had retrospective effect from when the work began, or that the contract contained an entire agreement clause. Daniel Woods, an associate in our disputes team, considers the case further below. Continue reading

Commercial Court considers when contracting party may have duty to make disagreement known

The Commercial Court has recently considered when a party may have a duty to correct a mistake or assumption by its counterparty under the principle of “estoppel by acquiescence”. This principle applies where one party acts on an assumption that is acquiesced in by the other. If a reasonable person would expect the acquiescing party, acting honestly and responsibly, to speak up, that party can be estopped from denying the assumed state of facts or law if it would be unjust to allow him to challenge the assumption.

In obiter remarks in Starbev GP Limited v Interbrew Central European Holdings BV [2014] EWHC 1311 (Comm), Blair J considered the scope of this so-called “duty to speak” and held that:

  • “acting honestly” for these purposes does not necessarily imply that the party against whom the estoppel is raised must be guilty of actual dishonesty, but there must at least be some impropriety – acting irresponsibly is not sufficient; and
  • the estoppel can arise not only where the party raising it is mistaken as to the true position, but also where that party is proceeding on the assumption that something is agreed or certain and the other knows that this is not the case.

Given the fairly high threshold for establishing an estoppel, contracting parties may wish to agree a contractual duty to speak in certain circumstances, or seek express confirmation of their understanding on any important matters.

On a separate issue, Blair J held that the words “the purpose” in a contractual provision should ordinarily be interpreted as referring to the dominant purpose rather than the sole purpose or one of a number of purposes.

Gregg Rowan and Kasim Khorasanee consider the decision below. Continue reading

Exclusive jurisdiction clause won’t necessarily prevent grant of stay where there are related proceedings, but makes it very unlikely

The Commercial Court has held that the existence of an exclusive jurisdiction clause in favour of the English court does not, when there are proceedings already underway in another EU member state, mean the two sets of proceedings cannot be ‘related’ for the purposes of Article 28(3) of the Brussels Regulation. The English court therefore still has the discretion to stay its proceedings in favour of the court first seised. The jurisdiction clause will however be a very significant factor against the grant of the stay: Nomura International Plc v Banca Monte dei Paschi di Siena Spa [2013] EWHC 3187 (Comm).

Where proceedings before two member states’ courts are the same, the court second seised must stay its proceedings until the jurisdiction of the first court is established and then decline jurisdiction (under Article 27). Where the proceedings are related, there is a discretion whether to stay under Article 28. This case shows that such a discretion exists even where there is an exclusive jurisdiction clause in favour of the second court. It is however very unlikely to be exercised. Continue reading

High Court finds litigation funder was entitled to terminate funding agreement

In a rare decision on termination of a litigation funding agreement, the High Court has held that the funder validly terminated the agreement under a clause which allowed termination if in the funder’s reasonable opinion the claimant’s prospects of success were 60% or less: Harcus Sinclair (a firm) v Buttonwood Legal Capital Limited and others [2013] EWHC 1193 (Ch).

In any case where claimants are contemplating entering into a funding agreement, it is essential that they and their advisers consider carefully the terms on which the funder can terminate the agreement. As this case illustrates, the courts are prepared to hold funded parties to their bargain. Further, where the funder has the right to terminate based on a reasonable opinion as to prospects, claimants and their advisers must ensure that they cooperate with the funder in providing information and documentation to allow that assessment to be made. Where there is a failure to do so, the present decision suggests that the courts may not be sympathetic to an argument that the funder’s opinion was unreasonable.

The funder in this case was not a member of the Association of Litigation Funders of England and Wales (ALF) and was not therefore subject to its voluntary code of conduct introduced in November 2011 (see post). Funders who are subject to the code may reserve the right to terminate only in limited circumstances, but these include where the funder reasonably ceases to be satisfied about the merits of the dispute. The agreement must provide that, if there is a dispute about termination, a binding QC’s opinion shall be obtained.

Continue reading

High Court decision shows need to be clear whether settlement offer subject to contract

A recent High Court decision illustrates the importance of stating clearly that a settlement offer is intended to be subject to contract, where that is the case. Here the court found that the defendant’s letter setting out terms of settlement, “such settlement to be recorded in a suitably worded agreement”, constituted an offer that was capable of acceptance and had been accepted by the claimant: Newbury v Sun Microsystems [2013] EWHC 2180 (QB).

There was little dispute as to the applicable principles. In determining whether a contract has been concluded, the court must look at the correspondence as a whole and apply an objective test. Where it is understood that a formal document recording the terms will need to be executed, the question of whether the parties intend to be bound immediately, or only when the formal document is executed, depends on an objective appraisal of their words and conduct.

On the one disputed point of principle, the court found that where, as here, a contract is said to be contained in a document or documents, the court cannot have regard to the parties’ subsequent conduct for the purpose of considering whether those documents gave rise to a binding contract.

Ultimately each case will turn on its own facts, but here it was significant that the offer specified a period for which it was available for acceptance, and a period in which payment would be made if accepted. The judge said these factors clearly indicated an intention to put forward a binding offer. It was also relevant that the letter was not expressed to be “subject to contract”; the presence of those words would have been a clear indication that the terms were not intended to be binding, and their absence was a relevant factor indicating the contrary. Continue reading

High Court decisions on admissibility of opinion evidence

In two recent decisions, the High Court has considered the circumstances in which opinion evidence contained in third party reports or articles is admissible in civil proceedings. In Rogers v Hoyle [2013] EWHC 1409 (QB), the court had to consider whether a report produced by the Air Accident Investigation Branch of the Department for Transport (the “AAIB”) was admissible in a negligence claim against the pilot of the airplane involved in the crash. In Interflora Inc v Marks and Spencer PLC [2013] EWHC 936 (Ch), the question was whether academic journal articles relating to internet literacy were admissible in a trade mark infringement claim.

In Rogers, the court considered whether the AAIB report had to be excluded as a result of the substantial body of authority demonstrating that findings of tribunals and inquiries are not generally admissible in subsequent proceedings – the so-called rule in Hollington v Hewthorn [1943] KB 587. The judge distinguished this line of authority on the basis that it applies only to judicial findings (which must be based solely on the evidence adduced by the parties) rather than those of an expert investigator (which are based on the expert’s own technical knowledge and experience). The AAIB report fell into the latter category and therefore did not have to be excluded under that rule.

In both cases, the court held that although the evidence in question was “expert evidence” in a general sense, it did not fall within Part 35 of the Civil Procedure Rules and therefore the court’s permission was not required to adduce it. Each judge concluded that Part 35 controls only the giving of evidence by an “expert” as defined in that part, i.e. “a person who has been instructed to give or prepare expert evidence for the purposes of proceedings”.

The key points arising from these first instance decisions are:

  • Judicial findings, based solely on the evidence adduced by the parties, are not admissible in subsequent civil proceedings (subject to a statutory exception for evidence of criminal convictions). This rule does not however apply to the findings of an expert who is entitled to draw on his or her own knowledge and experience in reaching conclusions.
  • The court’s permission is not required to adduce pre-existing evidence containing expert opinion, such as a third party report or article. Permission is only required where the expert has been instructed for the purposes of the proceedings.
  • The court does however have a discretion to exclude such evidence, and may do so for example if the evidence is of a sort that the court would have difficulty understanding and evaluating without an expert’s assistance. Continue reading

Recent case law on expert determination

There has been a spate of recent case law relating to expert determination. In this post James Farrell, Emily Lew and Michael Mendelblat consider three judgments in which the court had to decide whether to stay legal proceedings in favour of expert determination, namely the Court of Appeal decision in Barclays Bank PLC v Nylon Capital LLP [2011] EWCA Civ 826, and two High Court decisions that considered Barclays: Persimmon Homes Limited v Woodford Land Limited [2011] EWHC 3109 (Ch) and Wilky Property Holdings Plc v London & Surrey Investments Ltd [2011] EWHC 2888 (Ch).

Whilst there is some indication that the courts are reluctant to oust the jurisdiction of the court by way of a wide expert determination clause, each case is likely to turn on its own facts and the construction of the particular clause in question. Continue reading

Supreme Court confirms new exception to the ‘without prejudice’ rule

In its judgment handed down on 27 October 2010 in Oceanbulk Trading & Shipping SA v TMT Asia [2010] UKSC 44, the Supreme Court added a new exception to the ‘without prejudice’ rule. It held that facts communicated between parties in the course of ‘without prejudice’ negotiations should be admissible, if they would otherwise be admissible as part of the ‘factual matrix’ to aid contractual construction. Continue reading

Court of appeal overturns decision dealing with the impact of West Tankers

The Court of Appeal has overturned the Commercial Court’s judgment earlier this year in National Navigation v Endesa in a decision which, although more consistent with principles of comity, and with the reasoning of the ECJ in West Tankers, may be considered to highlight some of the unsatisfactory effects of that decision: National Navigation v Endesa [2009] EWCA Civ 1397. Continue reading