CIVIL PROCEDURE

Dispute resolution - conduct - reasonableness - refusal to mediate - costs consequences

The Wethered Estate Ltd v (1) Michael Davis (2) Alison Davis (3) Foundations for Living (2005): Ch D (Clive Freedman QC): 15 July 2005



Determination of costs issues following a declaration successfully granted in favour of the claimant (W). The dispute between the parties had concerned the parking of a vehicle by the defendants (D) on W's property.


Before proceedings were commenced, D proposed mediation to settle the dispute. However, W stated that it would not entertain mediation while the vehicle remained on its land.


Following the removal of the vehicle, the dispute continued and W stated that it would not entertain mediation until each party had clarified the issues in dispute. A claim form was subsequently issued. Mediation eventually proved unsuccessful and at trial a declaration was granted substantially in the terms sought by W. D had argued that W should not be entitled to its costs because it had been unreasonable in refusing to mediate until after proceedings had commenced.


T Fancourt QC (instructed by Rosling King) for the claimant; G Fetherstonhaugh QC (instructed by Allen & Overy) for the defendants.


Held, the conduct of W could not be categorised as unreasonable, Burchell v Bullard (2005) EWCA Civ 358, (2005) BLR 330 applied. In the circumstances, it was not unreasonable for W to have refused mediation while the vehicle remained on the land.


Furthermore, while in many cases it would not be reasonable to defer mediation until the litigation had reached an advanced stage, the instant case involved questions of construction of an agreement against a disputed factual matrix. It had not been shown that it was unreasonable for mediation not to have taken place after the removal of the vehicle, particularly having regard to the difficulty of the definition as to what was the true nature of the dispute between the parties. In the circumstances, therefore, W was entitled to its costs.


Other costs issues, including issues arising from the conduct of the parties during the litigation, were determined in W's favour. Costs determined.





COSTS


Civil procedure - hospitality and leisure - personal injury - costs-capping orders - group litigation orders - hotels - package holidays - proportionality - after-the-event insurance - success fees

The claimants set out in schedule 1 to the order of the Senior Master dated 17 January 2005 v (1) TUI UK Ltd (2) Thomas Cook Tour Operators (3) Sunstar Leisure Ltd (4) Travel City Direct (5) Cosmosair plc (2005): Supreme Court Costs Office (Master Hurst (Senior Costs Judge)): 11 August 2005


A group litigation order provided for the costs of the 869 claimants (C) to be capped and the court had to determine the amount of the costs cap.


Five sets of proceedings had been commenced by C, who had visited the Torremolinos Beach Club on holiday between October 2000 and August 2002. C claimed damages against the defendant tour operators (D) as a result of gastro-intestinal or viral infections contracted by themselves and members of their family while on holiday.


A group litigation order had been made that provided that the claimants' costs were to be capped with the amount to be determined by a costs judge. The order limited the number of lead claimants to 20. C's costs up to the date of the order totalled £1,621,838.


After the making of the order, C had incurred further costs of £217,470. C's estimate of future costs ranged from £1,404,490 to £1,481,715.


D's case was that C's total costs should be capped at a total of £893,652, including disbursements, counsels' fees and VAT. The total for the costs of D, which for commercial and conflict reasons were represented by two sets of solicitors, was put at something over £900,000.


Nicholas Bacon (instructed by Irwin Mitchell) for the claimants; James Dingemans QC (instructed by Plexus Law and MB Law) for the defendants.



Held, unless the costs-capping order provided otherwise, it took effect only from the date it was made.


There was nothing exceptionally complex about the litigation. The problem of the number of claimants had been brought under control by the making of the group litigation order limiting the lead cases to 20. The complexities were otherwise no more than would be expected in holiday litigation that was not subject to an order.


The quantum issues would be few; the issues of Spanish law, food safety, environmental hygiene, microbiology and virology, although potentially difficult, would be dealt with by experts in those fields but should not cause particular difficulty for C's solicitors.


The number of issues had increased in order adequately to reflect the pleaded cases, but those issues would not take longer to resolve than the issues originally and incompletely drafted by C.


C's estimate of average future costs per case ignored the fact that the future costs would relate only to the 20 lead cases.


The trial could reasonably be expected to be completed within three weeks and the costs cap should be determined on that assumption.


The litigation was being used to generate excessive and unreasonable costs. The claims were of a kind that individually could not be litigated economically. Without a group litigation order the majority would not have pursued their claims. The purpose of the order was to enable such claims to be brought at a realistic cost. The order enabled claimants with modest claims to pursue those claims, but that ability came with the concomitant requirement that the costs be strictly controlled, King v Telegraph Ltd (2004) EWCA Civ 613, (2005) 1 WLR 2282 applied.


D's suggested hourly rates were too low and the times that they had allowed for C's solicitors to carry out the work were too short. On the other hand, the rates claimed by C could not be justified, nor could the times that they put forward as being reasonable. The figures for the costs cap were based on the following hourly rates: partner £250, associate £175, solicitor £150, paralegal £100.


In quantifying the costs cap there were four components, namely profit costs, counsels' fees, experts' fees and other disbursements. The cap was quantified at a total of £881,250, made up of: solicitors' profit costs, £500,000; VAT (if applicable), £87,500; counsels' fees, £150,000; VAT (if applicable), £26,250; experts' fees, £90,000; VAT (if applicable), £15,750; other disbursements, £10,000; VAT (if applicable), £1,750.


The figure for the costs cap took no account of the time that might be spent in arranging after-the-event insurance nor any figure for the premium itself.


Any success fee would attach to the solicitors' base costs but would not be subject to the overall cap. Judgment accordingly.





CRIME


Sentencing - fines - health and safety offences - inconsistent verdicts - jury directions - prosecution costs orders - higher standard of care for public - fatal accidents

R v B&Q plc (2005): CA (Crim Div) (Lord Justice Thomas, Mr Justice Grigson, Recorder of Cardiff): 27 September 2005


The appellant (B) appealed against its conviction and sentence for five counts of a breach of duty under section 3(1) of the Health and Safety at Work etc. Act 1974.


The counts followed a fatal accident at one of B's stores when a forklift truck was reversed in the external yard of the store, striking a glancing blow to one of B's employees and crushing a shopper to death. It was the prosecution's case that a banksman should have been present during forklift truck movements.


B was acquitted of three counts in relation to its duties to employees under section 2(1) of the Act. B was fined a total of £550,000 and ordered to pay £250,000 towards the prosecution costs.


Two previous trials had been aborted because of the unsatisfactory nature of the CCTV evidence of the incidents. Prior to the commencement of the third trial, B was acquitted of four further counts that had been brought by the prosecution. B submitted that it was wholly illogical for the jury to have returned verdicts of guilty and not guilty in respect of the same fatal accident; it should be granted leave to appeal on the basis that the judge should have given a further express direction that evidence in relation to one count was not admissible in relation to the other counts; the judge had adopted the wrong approach on sentencing; the order for costs in favour of the prosecution did not properly reflect what had happened during the proceedings.


Peter Rouch QC, Malcolm Gibney (instructed by Bond Pearce) for the appellant; George B Alliott (instructed by the solicitor, Poole Borough Council) for the council.


Held, the correct approach was to consider whether the directions given to the jury were correct and, if so, to ask whether, on those directions, the verdicts were logically consistent. In presenting its case, the prosecution made no distinction between employees and non-employees. However, the judge carefully directed the jury that it should consider each of the counts separately and that the evidence on each was different and therefore its verdicts might not be the same.


It was for the jury to consider whether B was guilty in the light of the directions and the evidence. The jury was entitled to come to the verdicts it did, as there were a number of factors that applied to B's employees but not to members of the public. In particular, employees were familiar with forklift truck operations and were trained in health and safety, the public would be unaware of forklift truck movements and the need to take care in respect of them, and members of the public might include children who were less able to look after themselves.


Therefore, the jury could, as a matter of logical consistency, have concluded that B had not done all that was reasonably practicable to ensure that no forklift truck movements took place without a banksman present because of the risk to children, but had done all that was reasonably practicable for employees. It could logically have been sure that a much higher standard was applicable in respect of the public. Accordingly, there was no inconsistency in the jury verdicts.


The jury was sufficiently directed to consider each count separately and it was clear from the verdicts that the jury had done so. Leave to appeal on that ground was refused.


The judge was correct to look at the totality of B's criminality including the degree of repetition and the management failure to appoint a banksman. The fines were not manifestly excessive or wrong in principle, but were at the very bottom of the scale of what might be considered appropriate.


The judge had erred in the exercise of his discretion in making the prosecution costs order by adopting a global approach. B should have been given a sum by way of credit that properly reflected the costs incurred by it in the aborted trials, and should not have been required to pay the prosecution costs of those trials. It was for the prosecution to have ensured that the CCTV evidence was satisfactory. Allowance should also have been made for B's acquittals on some counts. Therefore, the prosecution costs order was reduced to £177,792.28. Appeal allowed in part.





INSOLVENCY


Administrators - appointments - information - nominees

In the matter of World Class Homes Ltd (2004): Ch D (Mr Justice Lindsay): 4 November 2004


The applicant company (W) applied for an administration order. W had requested the appointment of a firm (X) as administrators. X proposed two nominees.


However, the respondent creditor requested the appointment of another firm (B) as administrators. B proposed one nominee. The administration was not opposed. The issue was who should be appointed. The respondent submitted, among other things, that there were grounds for loss of confidence by creditors in X as administrators. In particular, X had refused to provide certain information about W.


A Goodison (instructed by Woodfine Batchelor) for the applicant; R Agnello (instructed by Rochman Landau) for the respondent.


Held, While X could have been more liberal with information than it was, there were grounds for it to be cautious and not to give out information without direct authority from W. X's reaction to requests for information was not sufficient to indicate reasonable grounds for supposing that if appointed it would not do its jobs as well as any other firm.


However, there were some factors that pointed in favour of one firm rather than the other. X had some existing acquaintance with the affairs of W. In particular, it had already gauged interest from prospective buyers in W's assets. Furthermore, X was a national and to some extent an international firm, as it had offices in Portugal. As W's business concerned the buying, selling and advertising of properties and holiday opportunities in Portugal, there might be some advantage in having a firm that had branches in Portugal.


Another benefit was the fact that X had proposed two nominees. That meant that if one were ill, there would still be someone who could attend to the affairs of W. There was no reason to think that either X or B, if appointed, would not do its very best to do a proper job and to achieve a proper discharge of its duties.


As the nominees were evenly balanced in that regard, it was only minor factors that were likely to point in favour of one firm over the other, Maxwell Communications Corporation plc (1992) 1 BCLC 465 considered. In the circumstances, X should be appointed as the administrators. Application granted.





LANDLORD AND TENANT


Social security - eviction - execution - housing benefit - oppression - rent arrears - warrants of possession - setting aside executed warrants for possession

Circle 33 Housing Trust Ltd v Desmond Ellis (2005): CA (Civ Div) (Lords Justice Ward, Chadwick and Moore-Bick): 23 September 2005


The claimant landlord (C) appealed against an order setting aside its executed warrant of possession and allowing the defendant tenant (D) re-entry to the property from which he was evicted.


D, an assured tenant of residential property belonging to C, had been in receipt of income support and had established an entitlement to housing benefit. C had been in direct receipt of the housing benefits, which covered D's ongoing rental commitments. The housing benefit payments ceased and D fell into rent arrears.


It was an express term of the tenancy that C was subject to certain management guidance that provided that it should make every effort to make direct contact with the housing benefit department before taking enforcement action for rent arrears. C obtained a possession order and sought D's assistance to ascertain if he was entitled to payments of housing benefit to satisfy the rent arrears. As D did not respond, C issued a warrant of possession and evicted him.


D subsequently made inquiries, as suggested by C, and acquired a letter from the local Social Security office confirming that he had been in receipt of income support during the relevant periods. The department later re-assessed D's claim and confirmed that he had in fact been entitled to benefits at all material times.


D was accordingly credited with benefit payments, reducing his indebtedness. D's application for an order under section 9(2) of the Housing Act 1988 permitting him to re-enter the premises was dismissed as the execution of the warrant did not demonstrate fraud or oppression.


D's appeal was allowed on the basis that the execution of the warrant had been unjust given the small amount of rent arrears and that C had failed to make the necessary enquiries as to why housing benefit had ceased. C appealed. C contended that the judge had erred in finding oppression in its conduct by reference to matters that took place following eviction.


Jonathan Manning (instructed by Devonshires) for the claimant; Stephen Reeder (instructed by Lewis Nedas & Co).



Held, section 9(2) of the 1988 Act provided a regime that recognised a tenant should not be evicted where there was an alternative solution. A tenant had the opportunity to seek such alternative solution through the courts right up to the point of eviction.


However, there had to come a time when a landlord would be able to rent the property in the knowledge that the former tenant was not able to return to the court seeking to resume occupation. That time arose when eviction had taken place and thereafter a landlord could rent the property in the knowledge that the scheme protecting the former tenant had come to an end.


The jurisdiction to intervene after eviction had to be based on principle and a tenant had to satisfy the court that there had been an abuse of process or oppression in connection with obtaining the warrant of possession, Jephson Homes Housing Association v Moisejevs (2001) 33 HLR 594 applied.


The decision to set aside the warrant on the basis of oppression was plainly wrong. The judge had been wrong to take the view that C was required to do more than it did do. The judge was also wrong in failing to address at all the question of what would have happened if C had done what the judge thought it should have done. The answer to that question was nothing, as both C and the housing benefits department were dependent on D providing certain information. Appeal allowed.





MENTAL HEALTH


Detention - discharge - mental hospitals - failure to exercise residual discretion - dangerousness - unfettered discretion - hospital managers - responsible medical officers

R (on the application of SR) (by her litigation friend the Official Solicitor) v Huntercombe Maidenhead Hospital & (1) MR (nearest relative) (2) Hackney London Borough Council (3) East London & City Mental Health NHS Trust (4) Hospital managers (interested parties) (2005): QBD (Admin) (Mr Justice Jackson): 21 September 2005


The claimant (R) applied for judicial review of a decision by managers at the defendant hospital to discharge her from hospital under section 23 of the Mental Health Act 1983.


R, who was 15 years old at the time of the hearing, was diagnosed as suffering bi-polar disorder with psychotic symptoms and was detained under section 3 of the Act. R's father appealed against the detention. However, the responsible medical officer (RMO) was of the opinion that she should not be discharged as she was a patient who was likely to act in a manner dangerous to herself and others.


Under section 23, the decision fell to the hospital managers, who ruled that while R met the criteria for detention they were not satisfied that she met the stringent test of dangerousness, under the codes of practice paragraph 23.12 made pursuant to section 118 of the Act, which was an essential requirement for the RMO to bar discharge.


Accordingly, discharge was ordered. Proceedings were commenced by the Official Solicitor, who was R's litigation friend. R contended that the decision to discharge her from hospital was unlawful and submitted that the managers had fettered their discretion under section 23, and that their decision was irrational and perverse.


Laura Davidson (instructed by Kaim Todner) for the claimant; Huw Lloyd (instructed by DLA Piper Rudnick Gray Cary) for the defendant; Katie Scott (instructed by Hodge Jones & Allen) for MR; Joanna Dodson QC, Sophia Cannon (instructed by the local authority solicitor) for Hackney LBC; Jenni Richards (instructed by Bevan Brittan) for East London and City Mental Health Trust; Gerrard Clark (instructed by Radcliffes Le Brasseur) for the hospital managers.


Held, it was clear from the statutory provisions that managers exercising powers under section 23 had a wide discretion. It was also clear from the Act and the codes of practice that if the managers overrode the RMO on the issue of dangerousness, it was a strong pointer for discharge but it was not an inflexible rule that they had to overturn the ruling of the RMO, R v Riverside Mental Health Trust Ex p Huzzey (1998) 43 BMLR 167 considered. It was implicit in the unfettered discretion that there could be exceptions.


The managers had made an error of law by failing to consider or to exercise their residual discretion. On the evidence, the managers' decision was irrational and perverse and no reasonable body of managers could have disagreed with the RMO's report on dangerousness. Accordingly the managers' decision was unlawful. Application granted.





TORT


Assault - conspiracy to injure - injunctions - striking out - failed coup d'etat

(1) Teodoro Obiang Nguema Mbasogo (president of Equatorial Guinea) (2) Equatorial Guinea (represented by the Attorney-General) v Logo Ltd & five others (2005): QBD (Mr Justice Davis): 21 September 2005


The applicants (D) applied to strike out the claim of the claimants (E) seeking damages for conspiracy and/or assault and injunctive relief. The first claimant was the president of Equatorial Guinea and the second claimant was the Republic of Equatorial Guinea, represented by the Attorney-General.


The claims arose from what was said to have been an attempted coup d'etat in Equatorial Guinea. The particulars of claim alleged that the individual defendants had conspired together to effect the coup using unlawful force, that the finance for the coup was to be provided by the defendant companies, and that although the coup had failed, E had suffered loss and damage in responding to the conspiracy. E sought an injunction to restrain D from making further coup attempts.


D argued that the unlawful means relied on by E in their conspiracy claim had to be actionable at the suit of E as against at least one defendant. E argued that it was enough that the acts were unlawful, even if not actionable at the suit of E against any of D.


Sir Sydney Kentridge QC, Harry Matovu, John McLinden (instructed by Penningtons) for the claimants; Philip Shepherd QC, Bajul Shah (instructed by Kerman & Co) for the first, second and fourth defendants; Michael McLaren QC, Paul Sinclair (instructed by Collyer-Bristow) for the fifth defendant.


Held, the pleaded facts (assuming them to be true) did not show a cause of action for assault. The tort of assault required an overt act indicating an immediate intention to commit a battery, coupled with the capacity to carry that intention into effect. In the instant case the presence of an advance group of mercenaries in the capital of Equatorial Guinea was a situation in which the first claimant feared that he and his family were likely to be injured or killed in the course of an attack. But that did not equate to the fear of an immediate application of force.


There was no allegation that the advance group, or any other person involved, did anything and, on the contrary, they had all been apprehended before they could. There was no apprehension of immediate violence. The allegation of assault was struck out. The first claimant alleged that he had suffered serious anxiety, distress, and disruption to his personal life and work and claimed that that was harm intentionally inflicted on him by D using unlawful means, but the tort of intentional infliction of harm was not known to English law, Wong v Parkside Health NHS Trust (2001) EWCA Civ 1721, (2001) EWCA Civ 1721 applied.


The conspiracy claim was of an unlawful means conspiracy. The test with regard to unlawful means should be the same in the context of the tort of conspiracy and the tort of unlawful interference with business, Michaels v Taylor Woodrow Developments Ltd (2001) 81 P & CR 302 followed.


There were statements in the House of Lords that were capable of being read either way on the issue whether in an unlawful means conspiracy the unlawful means had to be actionable at the suit of the claimant, Lonrho v Shell Petroleum Co Ltd (1982) AC 173 and Lonrho Plc v Fayed (1991) 3 WLR 188 considered.


The court was bound by Court of Appeal authority to hold that the unlawful act relied upon had to be actionable at the suit of the claimant, Powell v Boladz (1998) Lloyd's Rep (Med) 116 applied.


Because the coup d'etat had been discovered, the acts in question could at most be said to amount to an attempt. Since no tort comprehending unlawful means actionable at the suit of E against D giving rise to pecuniary loss had been raised on the pleaded case, the conspiracy claim was struck out. The conspiracy claim by the first claimant should be struck out in any event because he did not sufficiently plead or identify any pecuniary or financial loss suffered by him. The claim for injunctive relief was not struck out.


The court could not conclude that the sole object and purpose of the proceedings was to uphold political privileges and prevent revolutionary design, Emperor of Austria v Day and Kossuth (1863) 32 G J and F 217 considered. Judgment accordingly.