Source: https://www.brabners.com/blogs/dispute-resolution?page=6
Timestamp: 2018-07-18 02:35:29
Document Index: 397639923

Matched Legal Cases: ['art 24', 'EWCA ', 'UKSC ', 'EWCA ', 'EWCA ', 'art 31', 'art 34', 'art 31']

Notification injunctions and freezing orders
Across Brabners’ commercial litigation team we have considerable experience of obtaining and responding to worldwide freezing injunctions. These types of orders operate as the name suggests and freeze the entirety of someone’s assets without permission of the Court or the permission of the person who obtains the order. They are the ‘nuclear’ option when there is a risk of assets being disposed of before a claim can be brought to trial and a judgment enforced.
For a claimant freezing orders can be a vital tool to ensure a judgment is not a Pyrrhic victory. For a defendant the making of a freezing order can cause significant upheaval as they must deal with the claims against them while also dealing with their banks to ensure they can have access to funds permitted by a freezing order to pay their living expenses and legal costs.
The severity of the consequences of a worldwide freezing order means that the Courts impose a high evidential burden before one will be granted.
In the recent case of Holyoake v Candy [2016] EWHC 970 (ch) the Courts have introduced a remedy that represents a ‘half way’ measure in the form of Notification Injunctions. These orders require a Defendant to notify a Claimant if they intend to dispose of an asset over a prescribed value. The courts have described these types of orders as “less invasive interference with the defendant’s rights”.
The test to be satisfied to obtain a Notification Injunction is whether on the balance of convenience there is (i) a good arguable case and (ii) either a substantive right to prevent a Defendant from disposing of an asset or a risk that the Defendant would dispose of an asset which can be inferred from the facts.
For a Claimant with strong evidence of wrongdoing where there is real risk of dissipation of assets by a Defendant the Worldwide Freezing Injunction will remain the preferred option. Where there evidence is less compelling the lower threshold for a Notification Injunction may be attractive to give the Claimant comfort that a Defendant is not going to be able to dispose of any significant assets such as properties, shares and investments or valuable vehicle such as the luxury yacht in the Holyoake v Candy case.
Trends from the Latest Civil Claim Statistics
The latest statistics bulletin published by the Ministry of Justice in the Civil Justice Statistics Quarterly show an increase in the number of specified money claims issued at Court, and also the average time for a claim to reach trial.
The statistics are for the time period April to June 2016 and show that during this period 397,504 new claims were issued at Court, which is an 8% increase on the same time period last year. 2006 to 2012 saw a general downward trend in the number of new claims but this appears to have since reversed.
The number of specified money claims in this period was 12% higher compared with the same time period last year. The number of applications for judicial review has increased slightly compared with last year, but the number of insolvency petitions dealt with by the Court has decreased by 62%. The Ministry of Justice says that the reason for the latter is the launch of an online system for debtor insolvency petitions.
Of the claims allocated to a case management track within this time period, 46% were allocated to the small claims track, 45% to the fast track and 9% to the multi track.
The most common method of enforcing a money judgment remains obtaining a warrant of execution against the debtor’s goods. This enables a bailiff to recover and sell goods where payment is not made.
A lot of litigants ask when their case is likely to reach trial. The statistics for this time-period reveal that the average time for a small claim to reach trial is 31.7 weeks after being issued, and the average time for claims allocated to the fast track and multi track to reach trial is 54.3 weeks after issue.
The Supreme Court has recently clarified the law relating to civil claims involving illegality.
The long standing rule is that the Courts will not permit an illegal contract or any rights arising from illegal contracts to be enforced. For example, an agreement to pay for someone to be assaulted or murdered could not be enforced through the Courts if payment of the agreed price was not paid after the service had been provided. The public policy reasons for this are obvious.
In the case of Patel V Mirza the illegal act was less sensational and the claim did not concern payment for a service being provided
£62,000 was paid over by Patel to Mirza for the purpose of buying shares in a bank - it was known that this would be beneficial as Mirza had inside knowledge and he was expecting an announcement about the bank. Mirza did not buy the shares and Patel then issued a claim through the Courts for return of the £62,000.
In the judgments handed down the Supreme Court listed factors to be taken into account when deciding whether to refuse the claim by reasons of illegality. The factors include:
The seriousness of the illegality; and
How central the illegality is to the contract; and
Whether the illegality was intentional; and
Whether there was a disparity between the culpability of the parties to the contract for the illegal act.
It is likely that in the future cases of this type will be heavily dependent on the surrounding facts.
In the lead judgment Lord Toulson confirmed:
“A claimant, such as Mr Patel, who satisfies the ordinary requirements of a claim for unjust enrichment, should not be debarred from enforcing his claim by reason only of the fact that the money which he seeks to recover was paid for an unlawful purpose. There may be rare cases where for some particular reason the enforcement of such a claim might be regarded as undermining the integrity of the justice system, but there are no such circumstances in this case.”
Fundamentally, reimbursement of funds provided for an illegal purpose when the funds has not been used for that purpose was permitted by the Court on the facts of this case.
Warranty/Misrepresentation Claims and Company Sales
The High Court has recently dealt with the difference between warranties and representations in disputes arising from the sale of company shares.
On 12th November 2009 Idemitsu Kosan Co Limited (Idemitsu) entered into a share purchase agreement with Sumitomo Corporation to acquire the shares in an energy sector company then called Petro Summit Investment UK Limited. The purchase price was around US$575 million. As is usual, the share purchase agreement (SPA) contained various warranties given by the sellers to the purchaser.
Following completion the purchaser Idemitsu later discovered that the acquired company had substantial liabilities arising from a dispute between the owners of offshore oil and gas fields in which it had an interest. Idemitsu alleged that certain warranties given by the sellers were not true. However, Idemitsu could not pursue a warranty claim against the sellers because under the terms of the SPA such a claim had to be notified to the sellers within 18 months of completion, and that date had passed.
Idemitsu instead brought a claim against the sellers for misrepresentation. Misrepresentation is where one party makes an untrue statement of fact or law to another party who relies on the statement in entering into a contract and suffers loss as a result. Where the breach of warranty claim could not be pursued because of the contractual limitation on timing, a misrepresentation claim has a limitation period of 6 years and therefore Idemitsu were in time.
The SPA had an English governing law and jurisdiction clause so Idemitsu commenced proceedings in the Commercial Court seeking damages.
However the issue faced by the Claimant was that for its claim to succeed it had to prove that the statements made in the warranties in the SPA also amounted to representations. Sumitomo denied the claim and made an Application against Idemitsu seeking summary judgment dismissing the claim under Part 24 of the Civil Procedure Rules.
On hearing the Application, the Court decided that the warranties in the SPA were clearly identified as warranties. They were described as “Warranties” and not, as is sometimes the case in SPAs, as “warranties and representations”. The Court looked at whether they are statements in themselves (i.e. representations) or whether they are promises that the statements are true (i.e. warranties). To fall into the former category it is not enough that the subject of the promise is capable of being a representation. The Court found that there was no evidence that the parties intended the content of the warranties to also be representations. In addition, the SPA contained an ‘entire agreement’ clause as well as a clause excluding reliance on any pre-contract communications or representations.
For all of these reasons the Court decided that the claim had no real prospect of success. As there was no other reason why it should be disposed of at trial, the Court granted summary judgment for the Defendant Sumitomo and dismissed the claim.
The claim highlights the need for careful drafting of share purchase agreements, and the need for Claimants to be aware of applicable time limits to pursue a claim. Most SPAs contain dispute resolution clauses and these often include tight time-scales to give notice of an intended claim. Purchasers need to keep these limitations in mind and ensure that they comply with them in order to protect their position.
The dispute resolution team at Brabners has extensive experience of dealing with warranty and misrepresentation claims, whether in relation to company purchases or in contracts for the sale of goods and services.
Idemitsu Kosan Co, Ltd v Sumitomo Corporation [2016] EWHC 1909 (Comm)
What if you only beat an offer on Appeal? Pawar v JSD Haulage [2016] EWCA Civ 551
Mr Pawar was successful at the trial of his personal injury claim against JSD Haulage but he failed to beat 2 offers to pay damages that JSD Haulage had made during the proceedings. As a result Mr Pawar was responsible to pay JSD Haulage’s legal costs from expiry of the relevant period on the first offer made.
Mr Pawar appealed the level of damages awarded to him and succeeded in his appeal. This revised award of damages was higher than JSD Haulage’s first and lowest offer during the proceedings but still did not reach the level of their second higher offer.
Mr Pawar remained liable to pay JSD Haulage’s costs of the initial proceedings from the time of expiry of the relevant period on the second higher offer. The interesting question is who was then responsible for the costs of the appeal proceedings.
JSD Haulage sought to argue that they should not pay Mr Pawar’s costs of appealing the level of damages awarded to him because he had still not bettered their second offer. The Court of Appeal rejected this argument on the basis that Mr Pawar had to bring his appeal to improve his damages award and to reduce his liability for JSD Haulage’s costs of the initial proceedings.
It should always be borne in mind that offers made in proceedings cease to be relevant to any appeal proceedings. To obtain protection against liability for the costs of appeal proceedings the appeal should be considered on its own merits and offers made accordingly.
Read our first update in this 3 part series of blogs where we discuss - "High Court clarifies Costs protection from offers – Quit while you are ahead"
Read our second update in this 3 part series of blogs where we discuss - "Court warning on proportionate legal costs"
Malicious Prosecution Extended to Civil Claims
The Supreme Court has determined that a claim for malicious prosecution can be brought in relation to civil proceedings.
Malicious prosecution is where an unsuccessful claim is brought with malice and without reasonable or probable cause, causing damage to the person claimed against. Where the claim is in criminal proceedings that person can pursue the tort of malicious prosecution, and it had been thought from a previous House of Lords decision that the cause of action was limited to those proceedings. However the recent decision of the Supreme Court in Willers v Joyce [2016] UKSC 43 extends the tort to civil claims.
In this case Mr. Willers had been sued for alleged breach of contractual and fiduciary duties but the case was discontinued shortly before trial. Mr. Willers argued that the claim was part of a campaign against him and had been brought without reasonable cause. He brought his own claim for various heads of damage including reputational damage, damage to health, loss of earnings and also for additional costs incurred in defending the previous claim (the difference between the costs received on discontinuance on the standard basis of assessment, and the total costs said to have been incurred in defending the claim, was said to be £2.2 million).
The claim was struck out at first instance, the judge finding that the previous House of Lords decision was binding. The Judge exercised her powers to allow an application to be made for permission to appeal directly to the Supreme Court.
The Supreme Court gave permission to appeal and considered whether or not the tort of malicious prosecution could be brought in relation to civil proceedings, finding by a majority that it could. Lord Toulson, who gave the lead judgment, said that:-
“It seems instinctively unjust for a person to suffer injury as a result of the malicious prosecution of legal proceedings for which there is no reasonable ground, and yet not be entitled to compensation for the injury intentionally caused by the person responsible for instigating it”.
As well as proving malice a successful Claimant must prove that there was no reasonable or probable cause for the previous claim. This is a high hurdle to overcome but nevertheless the Judgment provides another potential option for a Defendant faced by such a claim in civil proceedings.
Claiming for Online Defamation against Unknown Defendants
In a recent Judgment the High Court has ordered an injunction and damages against a Defendant who had posted defamatory statements anonymously online.
The case of Smith v unknown defendants [2016] EWHC 1775 (QB) concerned a controversial website which enables users to make posts using pseudonyms. Between 10th and 12th May 2016 two users of the website amended articles to make statements referring to the Claimant which the Claimant alleged were defamatory.
The Claimant made a complaint through the website, and sent a letter of claim. The anonymous posters responded on the website rejecting the complaint and banned the Claimant from posting on the website.
The Claimant commenced Court proceedings against the two posters and against the website operator. The offending material was removed and the claim was stayed against the First Defendant poster and the Third Defendant website operator.
The position with the anonymous Second Defendant poster was different and the Claimant applied for default judgment against that party. The Claimant also sought summary disposal of the case under section 8 of the Defamation Act 1996. Section 8 of the 1996 Act enables a Claimant to seek judgment and summary relief if it appears to the Court that there is no defence to a defamation Claim which has a realistic prospect of success, and that there is no other reason why the claim should be tried.
The Court hearing took place without the Defendants in attendance and the Judge determined that it was a long-established principle that injunctive relief could be granted against persons unknown provided that the person is capable of identification by description in such a way as to identify with sufficient certainty those who are included within the injunction order and those who are not. The description of a Defendant as “Persons Unknown Responsible for the Operation and Publication of the website […]” was sufficient.
The Judge also considered whether the Defendant had been properly served, determining that “there can be no possible query or doubt as to the fact that service was effected since the administrators of the site not only responded to the pre-action documents but also published the same on the internet site itself”.
The Judge accepted that the statements made were defamatory and that the ‘serious harm’ requirement of section 1 of the Defamation Act 2003 was satisfied. The Second Defendant was ordered to pay damages to the Claimant of the maximum award of £10,000. The Judge also decided that there was reason to believe that the Second Defendant would persist in the campaign against the Claimant and therefore ordered an injunction to restrain the Second Defendant from repeating the statements.
The Judgment is a useful reminder for Claimants that they can use section 8 of the 1996 Act to seek the removal of defamatory online statements even when faced with anonymous Defendants who cannot be identified.
Does a party to a Civil Claim have a right to attend Court?
It is a general rule that a party to civil court proceedings is entitled to be present in Court for the trial of their claim. In the case of Da Costa & another v Sargaco & another [2016] EWCA Civ 764 the Court of Appeal considered whether the opportunity to attend Court is an absolute requirement for a fair trial, and the exceptions where a party can be excluded from Court.
In this case the two Claimants alleged that they each owned a motorcycle, and that when the motorcycles were parked together outside their house, a car ran into them and damaged them. The Claimants each claimed the pre-accident value of the motorcycle and the cost of hiring alternative transport.
The First Defendant (who was the alleged car driver) was not traced and the Second Defendant insurer argued that the claims were fraudulent.
At trial at the Central London County Court, the Judge ordered that each Claimant be excluded from Court whilst the other was giving evidence because their credibility was in issue. The Judge went on to decide that the claims were “manufactured or fraudulent” and “so inconsistent as to be implausible”. The claim was dismissed and the Claimants were ordered to pay the insurer’s costs.
The Claimants obtained permission to appeal to the Court of Appeal.
One of their grounds of appeal was that the decision to exclude them from Court was wrong and that they had a right to be present for the whole of the trial as parties to the claim. The Claimant appellants relied on the general rule at common law and the right to a fair trial in Article 6 of the European Convention on Human Rights.
Hearing the appeal, the Court of Appeal decided that in order for a party to have a fair trial there is no absolute requirement that he or she must have the opportunity to be present throughout trial. The Judgment lists examples of situations in which it may be necessary and permissible to proceed without a party being present, including where a litigant is disruptive and where a party has to leave Court for personal reasons.
The Court of Appeal decided that the County Court Judge was wrong to exclude the Claimants in this case but that the fairness of the hearing depends on the proceedings as a whole and that here the trial had not been unfair. Therefore this part of the appeal was dismissed.
Court warning on proportionate legal costs
Brabners litigation cost update 2
A teacher who brought a claim in privacy against the Mirror Group Newspapers has had her legal costs claims slashed on a second assessment.
The costs of claim were initially assessed by the Court at £241,817 and this was challenged by Mirror Group Newspapers as the claim had been settled for only £20,000. The costs ordered to be paid were over 12 times the damages recovered.
On further assessment the costs payable were reduced to £167,389 and, on a yet further assessment, the ‘reasonable and proportionate costs’ were reduced to £83,964.80, a figure which was still more than 4 times the damages recovered.
The test of proportionality for assessment of legal costs is a relatively recent introduction within the last few years and this decision serves to show that there remains considerable uncertainty how the test is being applied.
For the moment litigants are best advised to proceed on the basis that incurring legal costs greater than the amounts in question is a speculative approach and may render costs irrecoverable from a defeated opponent.
Caution must be exercised and claims run on controlled budgets to avoid any risk of a Pyrrhic victory.
Read our final update in this 3 part series of blogs where we discuss - "What if you only beat an offer on Appeal? Pawar v JSD Haulage [2016] EWCA Civ 551"
The Courts have a discretion to order a non-party to provide documents in a claim and in a recent case the High Court exercised that discretion in ordering auditors to disclose documents in an unfair prejudice dispute between company shareholders.
Parties to disputes should always consider whether there are relevant documents in the possession or control of parties outside of the claim. If so, they may seek an order requiring disclosure of those documents pursuant to the following sections of the Civil Procedure Rules (CPR):-
Part 31.17 deals with applications for non-party disclosure; and
Part 34.2 deals with applications for a witness summons requiring the witness to produce documents to the Court.
Outside of these rules a party may also seek a disclosure order pursuant to the case of Norwich Pharmacal v Commissioners of Customs & Excise or as an ancillary order to a freezing injunction.
The case of Destiny Investments (1993) Ltd v TH Holdings Ltd [2016] EWHC 507 (Ch) was a shareholder dispute. The 40% minority shareholder brought an ‘unfair prejudice’ petition under section 994 of the Companies Act 2006, arguing that the conduct of the 60% majority shareholder was prejudicial to the interests of the members generally. The petition included allegations regarding the control of a subsidiary, renegotiation of borrowings and various costs that had been incurred.
The petitioner sought disclosure of the working files and other documents from the company’s auditors, KPMG. The petitioner sought this disclosure on the basis that it would help them to understand certain disputed transactions and also for the purpose of valuing the company.
The respondent refused to consent to the auditors providing the disclosure, arguing that the documents were confidential and not relevant.
The petitioner made a third party disclosure application under Part 31.17 of the CPR. The Court decided that the documents sought were relevant and material to the dispute, and that disclosure of them was necessary in the interests of a fair trial. Confidentiality in itself is not a bar to disclosure and the documents requested were narrowly defined. On that basis the Court granted the third party disclosure order.
Disclosure orders can be a useful tool for any party to a dispute and can be sought during proceedings or at the pre-action stage before proceedings have been issued.