UK: Commercial Dispute Resolution Briefing, October 2009 (Part 1)

Last Updated: 27 October 2009
Article by Barlow Lyde & Gilbert LLP

ARBITRATION

Anti-suit injunctions available against non EU member states to protect UK arbitration

1) Roger Shashoua (2) Rodemadan Holdings Ltd (3) Stancroft Trust Ltd v Mukesh Sharma (2009)

The anti-suit injunction may be all but dead in the EU following the European Court of Justice's decision in West Tankers (C185/07), but parties may be reassured by this decision which confirms that it is still at least available as a remedy to prevent parties from commencing proceedings in non-EU states.

The parties entered into a shareholders' joint venture agreement governed by Indian law, which provided for the parties to arbitrate in London under the ICC Rules. Following an unsuccessful challenge by the defendant to the arbitral tribunal's jurisdiction, the London arbitral tribunal made a costs award in the claimants' favour. After failing to overturn that award in the English courts, the defendant tried to challenge it (and a subsequent charging order granted by the English courts to enforce the costs award) in the Indian courts. However, without notice to the defendant, the claimants obtained an anti-suit injunction against the defendant restraining his Indian action.

In response to the defendant's application to set aside the injunction, the High Court decided to uphold it, clarifying that since India was not an EU member state, such an injunction was not incompatible with European Council Regulation 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (the "Brussels Regulation") or the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention"). Helpfully for parties seeking anti-suit injunctions to protect proceedings here, the Court found that the rationale in West Tankers (i.e. the uniform application in the EU of the Brussels Regulation and mutual trust and confidence between member states) did not have any application as between England and non-member states.

It is worth noting that the defendant's challenge to the arbitral tribunal's jurisdiction (and to the subsequent costs award and anti-suit injunction) was made primarily on the basis that Indian law rather than English law was the law governing the arbitration. The defendant attempted this line of argument because, in the arbitration clause, London was only designated as the "venue" for the arbitration rather than the "seat". Cook J explained that an agreement as to the seat of an arbitration is similar to an exclusive jurisdiction clause. The "seat" determines which law governs the arbitration and the courts of the "seat" will normally have supervisory jurisdiction over the arbitration. He clarified that, whilst the "venue" will often be interpreted to mean the "seat" (and did so here), the two are not always synonymous and the venue may be merely a convenient location for the arbitration to take place. Parties should, therefore, be as clear as possible when drafting such clauses to limit the scope for misinterpretation and the clause being challenged.

www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWHC/Comm/2009/957.html&query=shashoua&method=boolean

English High Court has power to declare arbitration clauses binding despite contrary Spanish ruling

National Navigation Co v Endesa Generacion SA sub nom The Wadi Sudr (2009)

In this bold "pro-arbitration" judgment, the English High Court decided that where it has supervisory jurisdiction over an arbitration, it is not bound by decisions of courts of other EU member states regarding that arbitration. In taking this stance, the Court arguably undermined the spirit (albeit not the letter) of the West Tankers decision referred to above, in which the European Court of Justice emphasised the importance of mutual trust and respect between member states as well as the importance of member states having the power to rule on their own jurisdiction and the validity and applicability of arbitration agreements.

In this case, the claimant applied for a declaration that the London arbitration clauses in the parties' agreements (a head charterparty and a voyage charterparty) were valid and binding, and for an anti-suit injunction against the continuance of proceedings by the other party in Spain in which the Spanish court had reached a decision that the arbitration clauses were not validly incorporated.

The English Court had to consider whether it was bound to recognise the Spanish court's decision that the London arbitration clauses in the parties' agreements were not valid and binding. It decided that it was not bound to do so since the English Court proceedings fell within the arbitration exception to the Brussels Regulation and were thus outside its scope; furthermore, even if the English Court was otherwise bound to recognise the Spanish court's decision, it should not do so on public policy grounds given the UK's obligation under the New York Convention to give effect to an arbitration clause that is valid in accordance with its proper law. In light of this reasoning, the English High Court granted the declaratory relief sought (to the effect that there was indeed a valid and binding arbitration agreement) despite the contrary conclusion of the Spanish court. The High Court stated that conflicting judgments between member states were "inevitable" and that declarations could be distinguished from anti-suit injunctions as they did not "[interfere] with the exercise by another member state of the exercise of a Regulation jurisdiction". It did not, however, grant the anti-suit injunction sought as it accepted that the West Tankers case disallowed this.

www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWHC/Comm/2009/196.html&query=national+and+navigation&method=boolean

Failing to challenge arbitral award before supervisory courts does not preclude challenge at enforcement stage

Dallah Estate & Tourism Holding Company v The Ministry of Religious Affairs, Government of Pakistan (2009)

If a party fails to challenge an arbitral award before the courts supervising the arbitration, this does not preclude it from challenging the award later, at the "enforcement" stage.

Here, the arbitration agreement was between the appellant and a trust (set up by the Pakistani Government as a vehicle for a government project) which provided for disputes to be settled by arbitration under the rules of the International Chamber of Commerce, Paris. The French arbitral tribunal decided that it had jurisdiction and, after hearing the dispute, awarded damages against the Government of Pakistan despite it not appearing to be a party to (and therefore bound by) the arbitration agreement. The appellant sought to enforce the award in England. Initially, an order for leave to enforce was granted but the High Court set this order aside.

On appeal against the High Court's decision, the Court of Appeal considered (as the High Court had) section 103 of the Arbitration Act 1996 which provides that the party wishing to challenge the recognition and enforcement of a New York Convention award is entitled to ask the Court to reconsider all relevant evidence on the facts, including foreign law. Following that provision, the Court of Appeal noted that the High Court applied French law (since that was the law of the place where the award was made), and found that under French law, the Government of Pakistan was not a party to the arbitration agreement and hence the arbitration award did not in fact bind it and should not be enforced against it.

Endorsing the High Court's approach, the Court of Appeal rejected the appeal against the High Court's decision and explained that the Arbitration Act 1996 and the New York Convention preserve the right of a party to a foreign arbitration award to challenge enforcement on grounds which impugn its fundamental validity and integrity. The Court commented that if the person opposing recognition or enforcement of an award could prove that he was not a party to the relevant arbitration agreement, it would rarely, if ever, be right to recognise or enforce it solely on the ground that he had failed to take steps to challenge it before the supervisory court. The Court of Appeal clarified that this right to challenge the award at the enforcement stage exists even if time has expired for the party to challenge it before the supervisory courts.

www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWHC/Comm/2008/1901.html&query=dallah&method=boolean

BANKING

Bank liable to repay money paid by mistake

Jones v Churcher and another (2009)

Where banks receive mistaken payments, they would be well advised to raise inquiries promptly, ring-fence the payment and take immediate action to repay it. Failing to do so may mean that the monies are accidentally (or deliberately) paid away and render banks liable to pay back the amount from their own funds.

The claimant mistakenly carried out a CHAPS transfer of over £42,000 into the first defendant's account at the second defendant bank. The bank was given notice of the mistake by phone calls and SWIFT messages but did not take action until nearly two weeks later when it wrote to the first defendant asking her to sign a debit authority to send the money back. By that time she had paid away the money to a third party who had disappeared. The claimant claimed the return of the money from the two defendants under the law of restitution, which prevents one party from being unjustly enriched at the expense of another. The bank argued that once the money had been paid to the customer's account, its position had changed and from that point it could not return the funds without the customer's consent, since to do so would breach its contract with that customer. It also argued that it did not know of the mistake until after the money had been dissipated by the customer and could therefore not have done anything about it in any event.

The High Court held that both the bank and the customer were liable to repay the claimant. The appropriate test was whether it would be inequitable or unconscionable to allow the recipient to keep the monies. It rejected the bank's arguments, finding that once the bank had notice that the payment was a mistake (which was actually a number of days before the money was paid away by the customer), it should have taken steps to ring-fence the money pending further inquiries and attempted to contact the first defendant more quickly, within at most three working days. The High Court also rejected the bank's defence of "ministerial receipt" (available where the credit to the customer is irreversible) given that the bank did not actually lose control of the funds when it paid them into the customer's account, and the bank could have reversed the payment. The only risk to the bank was being sued by the customer but the likelihood of such action being successful given that the payment was so clearly a mistake, was low.

It is worth noting that the judge stopped short of holding the bank liable as an accessory to a breach of trust. This was because this requires a dishonest state of mind, which the bank did not have. He stated that "the degree of knowledge which may defeat a collecting bank's defence of change of position is not as great as that required to impose on the bank an accessory liability for breach of trust".

www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWHC/QB/2009/B17.html&query=jones+and+churcher&method=boolean

CIVIL PROCEDURE

Technically invalid Part 36 offer may be taken into account when awarding costs

In the Matter of Mary Gray Ritchie deceased (1) James Ritchie (2) William Barr Ritchie (3) Helen Gall Swiers (4) Margaret Gray Barr Pick v (1) Peter Francis Kevin Joslin (2) Robert James Brock (3) The National Osteoporosis Society (2009)

A Part 36 offer could be taken into account by the court when deciding costs, even though the deadline for acceptance indicated in the offer had been incorrectly calculated.

The claimants, the children of Mary Gray Ritchie, sought to dispute Ms Ritchie's testamentary capacity when bequeathing her estate to the National Osteoporosis Society ("NOS"). In the course of proceedings, they purported to make an offer to the NOS in accordance with Part 36, under which offers must be open for acceptance for at least 21 days. Although the offer was stated to be open for acceptance for 21 days from the date of service, the claimants' calculation of when that period expired was a day or two short. The NOS refused the offer. The claimants were successful in the action and the court had to determine the effect of the offer on costs. The High Court held that, since there was no doubt that it was intended to be compliant with Part 36, it could construe the offer accordingly, even though it was technically an invalid Part 36 offer.

However, exercising its discretion, since litigation concerning testamentary capacity is "all or nothing" in nature and the offer amounted to just four per cent of the estate, the court did not consider it was unreasonable for NOS to have refused it and decided that to award costs under Part 36 would be unjust in the circumstances. The Court therefore made no order as to costs as between the NOS and the claimants.

www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWHC/Ch/2009/B7.html&query=ritchie+and+mary+and+gray&method=boolean

Misconduct of defendant irrelevant to decision to strike out claimant's claim

Mohammad Zahoor and others v Sohail Masood and others (2009)

The Court of Appeal has clarified that a claim will be struck out where a claimant is guilty of misconduct so serious that it would be an "affront" to the court to allow him to continue with his claim. Disappointingly for such badly-behaved claimants, the fact that the defendant's conduct is also reproachful does not mean the claim is less vulnerable to being dismissed in this way.

"M" provided financial services to "Z", a former school friend. However, the relationship broke down and M brought a claim for beneficial entitlement to shares in Z's company and unpaid salary resulting from his summary dismissal. In the course of what was described by the Court of Appeal as "lamentable litigation", the trial judge found that both Z and M had forged numerous documents and perjured themselves. As a result of M's misconduct, Z asked the court to strike out or dismiss the claim without deciding its merits. However, the trial judge refused to do so in light of Z's own misconduct.

The Court of Appeal held that the only question which was relevant was whether M's misconduct was so serious that it would be an affront to the court to permit him to continue with his claim. It was not necessary to weigh M's misconduct against that of Z, as Mummery LJ stated "the defendants' misconduct was irrelevant ... The defendants did not start the proceedings. They did not seek relief from the court. They were merely defending the claims brought by the claimants."

Despite M's misconduct, the Court of Appeal did not strike out the proceedings as it explained that the whole point of a strike-out was to stop further time and money being spent on the proceedings. There was no point in doing so here since the proceedings had already reached trial. Hence no purpose would be served in doing so and findings would be made at trial in the usual way.

www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWCA/Civ/2009/650.html&query=sohail+and+masood&method=boolean

COMPANY LAW

Auditors successfully strike out claim by "one-man" company

Stone & Rolls Ltd (in liquidation) v Moore Stephens (a firm) (2009)

In a split decision, the House of Lords decided that a "one-man" company (a company owned and controlled by one man) cannot bring a negligence claim against its auditors, where the claim came about as a result of the fraudulent activities of the "one man". In so deciding, the majority of the House of Lords deemed his actions to be indistinguishable from those of the company.

Stone & Rolls was a company controlled and owned by Mr Zvonko Stojevic, who used it as a vehicle for fraud. Following discovery of the fraud, the company was put into liquidation and the liquidators brought a claim against the company's auditors, Moore Stephens, for failure to spot the fraud. Moore Stephens applied to strike out the claim on the basis that the company's loss was a direct result of its own fraud and therefore barred by the "illegality" principle, under which a court will not assist a claimant to recover compensation for the consequences of his own illegal action. Although the trial judge had refused to strike out the claim, the Court of Appeal unanimously agreed to do so.

The minority view in the House of Lords was that the individual behind the company was acting outside the scope of his authority, so the company was properly categorised as a victim of his fraud and the claim could therefore proceed. However, the majority held that in the case of a "one-man" company, the fraudulent conduct of the company's directing mind, will and owner is to be treated as the company's conduct. As a result, the company's claim against its auditors for failure to detect the fraud was defeated by the public policy rule that a court will not award compensation to a claimant for the consequences of his own illegal conduct.

NB: This was one of the first high profile cases brought by way of third party funding. Given that the funders will now face a large costs bill, it remains to be seen what effect the case will have on the emerging third party funding industry.

Barlow Lyde & Gilbert LLP acted for the successful auditors in this matter, further detail is available in our briefing note.

www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWHC/Comm/2007/1826.html&query=stone+and+rolls+and+moore&method=boolean

CONTRACT

House of Lords explains ambit of rule against admitting evidence of pre-contractual negotiations

Chartbrook Ltd v Persimmon Homes Ltd and others (2009)

This case presented the House of Lords with the opportunity to explain the ambit of the long-standing rule that pre-contractual negotiations are inadmissible as evidence of the meaning of the terms of a contract. In summary, the rule is not a blanket one and such evidence is admissible in certain circumstances.

Persimmon entered into an agreement to construct a mixed residential and commercial development on land owned by Chartbrook. The parties agreed that Persimmon would pay Chartbrook a sum which would be calculated on the basis of revenues generated by the residential element of the development. However, a dispute arose as to the precise meaning of the clause which determined how the parties should calculate those revenues. At both first instance and on appeal the court found in favour of Chartbrook, finding that Chartbrook's interpretation accorded with the natural reading of the words used. However, the House of Lords reversed that finding, holding that it was more important to interpret the clause so that it made commercial sense rather than to interpret it in accordance with ordinary rules of syntax.

Since the case could be, and was, decided without reference to pre-contractual negotiations, it did not actually require the House to discuss whether or not they could be admitted. However, despite this, in obiter dictum, Lord Hoffmann did so and affirmed the long standing rule that pre-contractual negotiations will generally be inadmissible in determining what a contract means. He stated that the question to be asked in construing a contract is what a reasonable person, having all the background knowledge available to the parties, would have understood the language in the contract to mean. In support of this, he emphasised that construing a contract is an objective exercise, and what the parties actually intended, i.e. their subjective intentions (as evidenced by pre-contractual negotiations), will usually be irrelevant.

However, Lord Hoffman softened the apparent harshness of this rule by explaining that pre-contractual negotiations are admissible in certain circumstances. Firstly, as "part of the background which may throw light upon what [the parties] meant by the language they used". Secondly, in "exceptional cases", pre-contractual negotiations may be relevant and "give effect to what a reasonable man in the position of the parties would have taken them to have meant". These exceptions are, arguably, consistent with the spirit of the rule against admitting evidence of pre-contractual negotiations to construe contracts, as in neither of these exceptions is Lord Hoffmann allowing such evidence to determine the parties' subjective intentions, only what they can be taken "objectively" to have intended the contract to mean.

Thirdly, evidence of pre-contractual negotiations is permissible to support an application to rectify (i.e. correct) the contract in circumstances where the contract does not, objectively, reflect the common consensus that the parties had reached. Lord Hoffmann stressed that this facility to rectify is not an exception to the rule against admitting pre-contractual negotiations, but operates outside it. Rectification could be available where, for example, the parties have negotiated on the basis of a common assumption between them (for example, regarding the meaning of certain words), and are thereby estopped from later claiming that the words in the contract have a different meaning.

For further detail see the BLG briefing note.

www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWCA/Civ/2008/183.html&query=chartbrook+and+persimmon&method=boolean

Exclusion clauses for deliberate breach must use clear and strong language

Internet Broadcasting Corporation Ltd (t/a NETTV) and another v MAR LLC (t/a MARHedge) (a US incorporated company) (2009)

Clauses which attempt to exclude liability for deliberate repudiatory breach of contract must use very clear and strong language.

The claimant sought to recover profits lost as a result of the defendant's decision to terminate their contract to support and provide content for an internet television channel. The defendant conceded that by purporting to terminate the contract in this way, it had committed a deliberate and fundamental (or "repudiatory") breach of the contract, which would entitle the claimant to seek damages for loss of profits. However, the defendant sought to rely on an exclusion clause in the agreement which excluded liability for loss of profit.

Although there is no rule of law that prevents exclusion clauses applying to such repudiatory breaches, the High Court decided that there is a strong presumption against them being construed in this way. Very clear and strong language will be required to rebut this presumption, particularly where the exclusion clause is intended to cover deliberate wrongdoing by a party in respect of an uninsurable breach.

Even if a literal reading suggests that an exclusion clause covers a deliberate repudiatory breach, it will not be so construed if to do so would defeat the main object of the contract. In this case, there was no clear statement in the exclusion clause that deliberate, personal and repudiatory wrongdoing was intended to be covered. Interpreting the exclusion clause in this way would defeat the main object of the contract and no reasonable businessman would understand that the exclusion should extend to cover uninsurable risks. The Court therefore held that the exclusion clause did not apply, stating that "the defendant's construction of the exemption clause would in effect deprive the contract of any real meaning from the claimant's point of view".

This ruling is an example of the court's rejection of a literal interpretation if this conflicts with commercial common sense. It is a useful reminder to parties to use very clear and strong wording if they wish to achieve contractual certainty. The defendant is currently seeking permission to appeal.

www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWHC/Ch/2009/844.html&query=marhedge&method=boolean

Court will prefer an interpretation that renders a clause effective

Anglo Continental Educational Group (GB) Limited v Capital Homes (Southern) Limited (2009)

Where neither party's interpretation of a clause provides a satisfactory solution, the court will prefer an interpretation rendering the clause effective and which the parties are likely to have intended.

This case concerned an agreement to purchase a property for development which was subject to restrictive covenants. The agreement between the parties was entered into subject to obtaining planning permission, but the purchaser decided to waive that condition and proceed to completion. However, completion never took place because the parties were unable to agree the correct purchase price.

In the agreement, the purchase price was stated to be £862,000 less the cost of obtaining deeds of release from the restrictive covenants. As the covenantees would only grant a deed of release following the grant of planning permission and planning permission had not been obtained before completion, the seller argued that the purchase price was simply £862,000. The purchaser argued that the purchase price was £862,000 less a figure to be determined after completion, which should be estimated at completion.

The Court of Appeal held that neither party's interpretation provided a satisfactory solution and the agreement was poorly drafted. However, it was improbable that the parties would have agreed that there should be no discount for the costs of obtaining the deed of release. The discount should be applicable whether or not planning consent had been granted and, if it had not been deducted at the time of completion, it could be determined as the amount reasonably required for the purpose of obtaining a release from the restrictive covenants so as to enable the development to take place.

The case demonstrates the purposive approach the courts will take when seeking to interpret contracts. The Court also briefly discussed whether pre-contractual negotiations could be admitted on the question of interpretation, an issue which has received considerable attention in Chartbrook v Persimmon (2009) (see above). Although not an issue here, the Court indicated that they could be admissible in certain limited circumstances to, for example, determine the background facts in order to objectively interpret a clause in the contract.

www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWCA/Civ/2009/218.html&query=anglo+and+continental&method=boolean

Implied term must be necessary to make the contract work

Mediterranean Salvage & Towage Limited v Seamar Trading & Commerce Inc (2009)

When deciding whether to imply a term into a contract, the court must consider whether the implied term is necessary to make the contract work. In this important case concerning a ship which was damaged when a hidden underwater projection penetrated her hull during loading, the Court of Appeal was asked by the claimant shipowners to consider whether a term should be implied into the agreement between it and the ship's charterers to the effect that there was a duty upon the charterers to nominate a safe berth for the ship at the loading port. Without such a term, the shipowners claimed that they would be unable to claim for the cost of repairing the damage suffered to the hull of the ship.

In a 2009 Privy Council case (Attorney General of Belize v Belize Telecom Limited), Lord Hoffmann held that the correct question was whether the implied term spells out "in express words, what the instrument read as a whole against the relevant background, would reasonably be understood to mean". However, in this case the Court of Appeal explained that Lord Hoffmann's test did not undermine the established rule that a term would only be implied into a contract if it is necessary to do so to make the contract work.

The Court of Appeal decided it was not necessary to imply a term as to the nomination of a safe berth to enable the contract to work. It did not follow from including a term that the charterers had to nominate a specific berth, that they therefore warranted the berth was safe and should therefore be liable for the loss caused as a result of it not being safe. It was for the owners to investigate the available berths, or where the charterers do opt to nominate a berth, bear the risk that the berth nominated might be unsafe. This case confirms the long-standing rule that before a term can be implied it must be necessary to make the contract work.

www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWCA/Civ/2009/531.html&query=salvage&method=boolean

Emails not enough to create legal relations

University of Plymouth v European Language Center Ltd (2009)

Where parties had previously contracted in a formal and detailed manner, a more casual exchange of emails and telephone conversations were not sufficient to create legal relations.

The European Language Center ("ELC") had, between 2001 and 2005, entered into formal written contracts each year for summer accommodation at the University of Plymouth. In May 2005, the University emailed ELC to advise that it would be able to offer 200 beds in 2006. This figure was subsequently revised downwards and ELC claimed that the University was in breach of contract. It claimed that, given the previous course of dealings between the parties, the May 2005 email was sufficiently clear in its terms to amount to an offer, which was accepted in subsequent conversations between the parties so as to give rise to a binding, albeit informal, contract which would be replaced in due course by a more formal agreement.

On appeal, the Court of Appeal held that the terms of the May 2005 email were not sufficiently clear to give rise to a binding offer on the part of the University. The email did not mention anything about essential elements of the contract, such as the price and the terms of payment, all of which had been dealt with in previous years in the formal written contracts. ELC's own failure to respond to the email also suggested that it did not think it amounted to an offer to enter into a binding contract. In any event, there was insufficient evidence to demonstrate that the offer had been accepted. The Court held that acceptance of an offer should be communicated so clearly as to leave the person making the offer in no doubt that a contract has come into existence.

This case serves as a warning both to those who seek to rely on informal telephone and email exchanges that they may not be sufficient to create binding legal relationships, and to those who do not wish to be bound that they should clearly specify that such communications are "subject to contract".

www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWCA/Civ/2009/784.html&query=university+and+plymouth&method=boolean

CONTRIBUTION

Apportionment of liability for damages between fraudulent and innocent defendants

Nationwide Building Society v Dunlop Haywards Limited and another (2009)

This case illustrates how the court apportions liability to pay damages as between a fraudulent defendant on the one hand and a merely negligent defendant on the other.

The lender, Cheshire Building Society (subsequently taken over by the claimant, Nationwide), advanced funds for the purchase of commercial property on the basis of a valuer's fraudulent and grossly excessive valuations and claimed damages against the valuer (in deceit) and its solicitors (in negligence) when the fraud was discovered. The solicitors settled with the claimant for £5.59m and brought a claim against the valuer's firm for a contribution under the Civil Liability (Contribution) Act 1978 (the "Act") on the basis that the valuer's firm was liable to the claimant for the same damage. The valuer's firm had been found liable to the claimant for deceit.

The High Court had to decide how to apportion liability between the parties, so that it could determine the quantum of damages payable by each. Before it could apportion liability between them the first, and obviously key, question for the Court was what amount both defendants should be found liable for under the terms of section 1(1) of the Act, (which provides for a contribution between parties in circumstances where they are both liable for the "same damage"). The Court had to decide what "same damage" meant, i.e. whether this was the full amount of the claimant's loss (£21m), or a different figure.

The Court decided that the "same damage" for which both parties were liable, was £13.2m rather than the full amount of the claimant's loss (£21m). The Court held that the items of damage claimed for which increased the claimant's loss from £13.2m to £21m were too remote to be claimed against the solicitors, given that the solicitors were liable to the claimant in negligence (rather than deceit, to which the concept of remoteness does not apply).

The second question for the Court was whether the £13.2m figure should be reduced to reflect the claimant's contributory negligence and/or the cap on liability contained in the solicitors' retainers with the claimant. The Court held that it would be just and equitable to reduce the £13.2m figure to reflect the claimant's 50 per cent contributory negligence so that the amount to be apportioned between the defendants was £6.6m. The Court decided that the solicitors' £5m liability cap in its retainer letter could not be used to reduce the £6.6m amount further, but that the cap could apply after apportionment of the £6.6m sum, to cap the solicitors' share.

The Court then apportioned the figure of £6.6m between the valuer's firm and the solicitors according to each party's blameworthiness and found that the solicitors were liable for 20 per cent (approximately £1.32m) and the valuers for 80 per cent. Thus the solicitors were entitled to a recovery from the valuers' firm.

www.bailii.org/cgi-bin/markup.cgi?doc=/ew/cases/EWHC/Comm/2009/254.html&query=nationwide+and+dunlop&method=Boolean

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This article is part of a series: Click Commercial Dispute Resolution Briefing, October 2009 (Part 2) for the next article.
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The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.