UK: Case Summaries And Updates – April 2013

Last Updated: 9 May 2013
Article by Jamie Cartwright and Ben Hay

Pre-action Protocol – a cautious reminder about compliance

Webb Resolutions Ltd v Waller Needham & Green (a firm) [2012] EWHC 3529

Facts

In this case, the High Court departed from the normal costs rules that follow an offer to settle intended to have the costs consequences associated with Part 36 of the Civil Procedure Rules. The usual order is that the claimant will be entitled to recover its costs incurred beginning from the expiry of the relevant period (21 days after the offer was made) to the date that the offer was accepted. However, the Court departed from this usual position citing the claimant's non-compliance with the relevant pre-action protocol.

The defendant accepted a Part 36 offer a year after it was made on the basis that the offer could not properly be assessed before then as a result of the claimant's failure to deal with the Professional Negligence Pre-action Protocol – the claimant had not complied with the defendant's request for the pre-action exchange of documents.

Decision

The court decided that the costs would not have been incurred had the claimant acted reasonably and complied with the request under the Pre-Action Protocol and therefore the claimant was ordered to pay the defendant's costs for that period.

CR Comment

The decision by the High Court serves as a reminder that pre-action protocols should be adhered to as far as possible and that the court has a power to impose cost sanctions where the court considers that appropriate steps have not been taken.

Clarity from the Court of Appeal in relation to the 10% increase in damages

Simmons v Castle [2012] EWCA Civ 1288

Facts

The Court of Appeal provided clarification on the recommendations made by Jackson LJ for a 10% increase in general damages.

In summary, Jackson LJ has undertaken a review of the civil justice system. Amongst various other initiatives, Jackson LJ recommended that some general damages (damages that relate to non-monetary aspects of a claim such as pain, suffering and loss of amenity) be increased by 10% for all tortious claims. This change is due to come into force where judgment is given after 1 April 2013.

This case considered whether:

  • this increase in general damages should also apply in cases for breach of contract (and not just tort claims); and
  • if the increase should apply to conditional fee agreements (it had already been decided that those who entered into a CFA before 1 April 2013 but were awarded damages after that date would benefit from the 10% increase).

Decision

The court decided that the increase should also apply to breach of contract claims due to the frequent overlap in such claims. However, the Court also ruled that the increase would not be available to claimants who had entered into a CFA before 1 April 2013.

CR Comment

There was a concern that the increase in general damages by 10% would give rise to an unfair windfall for claimants who had already entered into a CFA and could recover this on top of a success fee from the other side if successful. This decision confirms that this will not be the case.

Judgment serves as a warning to those drafting settlement agreements

Ansari v Knowles and others [2012] EWHC 3137 (QB)

Facts

In a recent defamation case, the High Court decided that a settlement agreement made between the claimant and the fourth defendant did not extinguish the action against the first and second defendants. The first and second defendants in this case alleged that the continuation of the claim against them was an abuse of process.

The claimant worked for the second defendant and the third defendant was an employee of the fourth defendant. The employee sent an email containing defamatory allegations about the claimant and copied it to the first defendant. The claimant settled the claim against the employer but continued with the claim against the remaining defendants. The defendants argued that the settlement agreement acted to release them from the claim and also claimed that the continuance of the claim was an abuse of process.

Decision

The court did not agree that continuing the proceedings was an abuse of process.

The defendants sought to argue that the general position prior to this case was that the release of one tortfeasor (wrongdoer) would usually operate to release liability of the others tortfeasors.

The court decided that there was no such rule although it acknowledged that the court should take into account the desirability of finality when construing settlement agreements in these circumstances. The court ruled that the proceedings should continue against the first and second defendants despite the settlement agreed between the claimant and the fourth defendant. This was despite the costs involved in pursuing the litigation and the use of court time used by permitting the proceedings to continue.

The court had considered that there was nothing in the agreement that prevented the claimant from pursuing the claim or which acted to release the remaining defendants from the cause of action. Despite the fact that the claimant had received full satisfaction of his claim, the court did not consider that pursuing the claim was an abuse of process due to the significance of the outcome of the claim to the claimant's reputation.

CR Comment

This case highlights that the courts appear no longer willing to accept that there is a rule that allows for the release of joint tortfeasors. The courts will, instead, consider the precise terms of any settlement agreements negotiated between the parties and the context in which the agreements exist.

Implied obligations as to reasonableness when fixing charges

Yilport Konteyner Terminali Ve Liman Isletmeleri AS v Buxcliff KG & Others [2012] EWHC 3289

Facts

The defendants' vessel was damaged in a collision. The claimant port agreed to unload the containers from the vessel on short notice to enable the ship to be repaired. The agreement between the claimant and the defendants was made by way of a letter of undertaking and an indemnity provided to the claimant port by the defendants.

The parties did not agree a price prior to the removal of the containers. Upon presentation of the claimant's invoice, the defendants disputed the amount claimed (US$1,380,977 in addition to the US$2,000,000 already held on account). The claimant subsequently claimed for the charges pursuant to the invoice.

Decision

The court held that the claimant's standard terms allowed it to apply a reasonable charge for unloading the containers, and was not bound by its usual rates. The court decided to what extent that discretion was limited.

The court was asked to consider whether the wording of the claimant's standard terms allowed the claimant to charge whatever it saw fit:

  • The claimant had argued that the claimant could charge what was reasonable (where unreasonableness was considered in the context of the Wednesbury test (i.e. a decision is Wednesbury unreasonable (or irrational) if it is so unreasonable that no reasonable person acting reasonably could have made it). This would mean that the pricing could only be scrutinised if no person acting reasonably in the position of the decision-maker would have made the same decision.
  • The defendants instead submitted that the charges made by the claimant must satisfy an implied term that they should be reasonable.

The court agreed with the defendants' approach.

Notwithstanding this, the court upheld the majority of the charges made by the claimant on the basis that:

  • the claimant had provided the services at short notice;
  • the claimant could not assess the scale of the task until the ship had arrived at the port (and even then, the claimant's knowledge about the task evolved as they unloaded the containers); and
  • the nature of the task had changed fundamentally.

The defendants' approach did not therefore mean that each item of work had to be approved and substantiated in detail. The court explained that this element of the case would turn on the facts of each case.

CR Comment

This case confirms that the scope of an implied term will usually turn on the individual facts of each case. However, where there is a discretion for one party to fix charges, there is scope for the other contracting party to argue that there is an implied term that the charges should be reasonable.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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