INQUESTS

Administration of justice - human rights - expert evidence - investigations - juries - right to life

R (on the application of Helen Takoushis) v (1) HM Coroner for Inner North London (2) Guys & St Thomas' Hospital NHS Trust (3) Commissioner of Police of the Metropolis: CA (Civ Div) (Master of the Rolls Sir Anthony Clarke, Lords Justice Chadwick, Moore-Bick): 30 November 2005



The appellant (W) appealed against the dismissal of her application for judicial review of two decisions of the respondent coroner (C), in the course of an inquest into the death of her husband (T), refusing W's applications that the inquest should be before a jury and should be adjourned to enable T's family to take expert advice with a view to the opinion of an expert being put in evidence.


T was a long-term schizophrenic who had been treated periodically in psychiatric hospitals.


A few days after he had been admitted to a hospital as a voluntary psychiatric patient, he had left and was found by the police apparently attempting to jump into the River Thames. He was taken to the accident and emergency department at the second respondent's hospital, where he was assessed by the triage nurse. T left the hospital before he was seen by a doctor. His body was later recovered from the river.


An inquest was opened and T's family asked for the inquest to be held with a jury, relying on section 8(3) or 8(4) of the Coroners Act 1988 on the ground that there might have been a systemic lack of care at the accident and emergency department, and that C should investigate the system employed by the hospital for dealing with members of the public identified as being at high risk of suicide or self-harm.


C declined to summon a jury or to adjourn the inquest to enable an expert to be instructed, since he concluded that there had been no systemic neglect and because the system at the hospital had since been changed.


The judge held that C had been entitled to conclude that it was not necessary to summon a jury on the basis that the procedures at the hospital were reasonable and that expert evidence was unnecessary because there was no defective system in issue.


C submitted that article 2 of the European Convention on Human Rights was not engaged. W submitted that the reasoning that led to C's decisions under review was flawed whether article 2 was engaged or not.


Edward Fitzgerald QC, Ruth Brander (instructed by Scott-Moncrieff Harbour & Sinclair) for the appellant; Clive Lewis (instructed by Camden Legal Services) for the first respondent; Iain Daniels (instructed by the in-house solicitor) for the second respondent; Gerard Boyle (instructed by the force solicitor) for the third respondent.


Held, although C had correctly decided that the question whether there was systemic neglect was a proper subject of inquiry at the inquest, he then concluded that there was no such neglect before hearing the evidence and, having called only a limited amount of evidence, reached the same conclusion at the end of the inquest.


In the circumstances, there was no proper or sufficient investigation of the system at the hospital, R v Inner West London Coroner, Ex parte Dallaglio [1994] 4 All ER 139 and R v North Humberside and Scunthorpe Coroner, Ex parte Jamieson [1995] 1 WLR 31 applied. The circumstances in which T came to leave the hospital were not too remote to form a proper part of the investigation.


A full investigation involved both what the system at the hospital was and how it operated on the day in question. Without properly investigating what the system was, C had held that there had been a breakdown of the system rather than any defect in the system itself.


In reaching that conclusion, C erred in principle. The inquest was not full and fair, and its verdict was quashed. A new inquest was ordered to investigate why T was able to leave the hospital before being seen by the doctor. Whether to summon a jury would be a matter for the coroner, as would the question of whether to call any expert evidence that the family sought to put before the inquest.


Where a person died as a result of what was arguably medical negligence in an NHS hospital, the state had to have a system that provided for the practical and effective investigation of the facts and for the determination of civil liability. Unlike in the cases of death in custody, the system did not have to provide for an investigation initiated by the state but might include such an investigation.


The question in each case was whether the system as a whole, including both any investigation initiated by the state and the possibility of civil and criminal proceedings and of a disciplinary process, satisfied the requirements of article 2 as identified by the European Court of Human Rights.


The system in operation in England, including both the possibility of civil process and the inquest, met those requirements, Goodson v HM Coroner for Bedfordshire and Luton [2004] EWHC 2931 (Admin), [2005] 2 All ER 791 considered.


There was an important difference between those who were detained by the state and those, like T, who were not.


Appeal allowed.





CONTRACT


Agents - terms - default judgments - jurisdiction - misrepresentation - false representations made on behalf of company - adoption and ratification of misrepresentations

(1) Ann K Clapp (2) David S Clapp (3) Harvey R Clapp III (4) Guy O Dove v (1) Enron (Thrace) Exploration & Production BV (2) ECT Europe Finance Inc: CA (Civ Div) (Lords Justice Buxton, Sedley, Jonathan Parker): 8 December 2005


The appellants (C) appealed against a decision ([2005] EWHC 401 (Comm)) to strike out its defence of misrepresentation in a contractual dispute with the respondent company (E). E cross-appealed against the judge's finding that it was not entitled to be paid a share of the revenue from the contract.


E had been a subsidiary of a large company (N). C owned shares in a company (T), which entered into a joint venture agreement with E to exploit natural power. It was agreed that E would provide financial and other assistance for the project in return for an option to acquire a 55% interest in the assets of T. At the conclusion of the agreement, E had started to incur capital expenditure but had not exercised the option. Following the discovery of serious accounting errors on the part of N, T served on E a formal notice of termination of the joint venture agreement. E later formally demanded from C the repayment of the capital expenditure and entered judgment in default of defence.


An appeal to set aside the default judgments was rejected. However, the court held that there was an arguable defence with regard to the balance of the quantum. Meanwhile, C served a defence and counterclaim alleging that the agreement had been entered into as a result of false representations made by agents acting on behalf of E.


E moved to strike out the misrepresentation defence and the court held that it did not have jurisdiction to set aside the balance of the default judgments, as the matter had been previously decided; in any event, if the court had had jurisdiction it would have excluded it as an abuse of process; the misrepresentation defence had no real prospect of success, so it was struck out, and the new application would have been struck out on the same ground if there had been jurisdiction to hear it.


The issues for determination were whether the misrepresentation defence was arguable; E was entitled to be paid its 55% share of the revenue from the assets before the closing date as defined in the joint venture agreement; the judge had jurisdiction to consider the new application to set aside the default judgment, and if he did have jurisdiction, whether that jurisdiction should be exercised.


Michael Briggs QC, John Machell (instructed by DLA Piper Rudnick Gray Cary) for the appellants; Murray Rosen QC, Kenneth MacLean QC (instructed by Herbert Smith) for the respondents.


Held, the misrepresentation plea failed at the crucial stage of establishing that N had acted as an agent of E in the negotiations. There was no reason to adopt the analysis that N moved from being principals to being agents of the new principals. In reality, the only way, if at all, that E could be inculpated with the knowledge of N was to show that it either adopted or ratified the resulting misrepresentations. As E had not been in existence when the original representations were made, the arguments necessarily failed. Therefore, the judge had been right to strike out the misrepresentation defence.


The contention that it was not even arguable that C was entitled to repayment of the intermediate income could not be upheld. The court could not conclude finally that E was not entitled to a set-off in respect of such income in reduction of their liability under the default judgment.


The crux was whether the beneficial interest in the 55% share passed to E when it acquired the legal title in the share, or whether it was not intended to pass until completion. That depended on the true meaning of the agreement, construed in its proper factual context. In the context of a transaction that specifically provided for the transfer of the legal title to the share prior to completion, the beneficial ownership of the share during the period between transfer and completion was at least open to argument. The cross-appeal was dismissed.


The court also said, obiter, that the judge was right to hold that he had no jurisdiction to hear the renewed application to set aside the default judgments. An applicant who failed in an application to set aside a default judgment on its merits, who through his own fault had not had the protection of a trial, was the legal equivalent of a defendant who lost at trial. There was no reason why such a judgment would not be recognised as final and binding once it was entered.


Appeal dismissed, cross-appeal dismissed.





TAX


Companies - dividends - income tax - settlements - arrangements in husband-and-wife company giving rise to element of bounty - shares

Geoffrey Peter Jones v Michael Vincent Garnett (HMIT): CA (Civ Div) (Chancellor Sir Andrew Morritt, Lords Justice Keene, Carnwath): 15 December 2005


The appellant (J) appealed against the decision ([2005] EWHC 849 (Ch)) that the arrangements between him and his wife (W) in relation to the company (X) through which he provided his services as an information technology consultant constituted a settlement for the purposes of section 660A(1) of the Income and Corporation Taxes Act 1988.


Each of J and W had acquired from company formation agents in 1992 one of the two issued shares in X. J was the sole director and W the company secretary. X's business supplying J's services prospered and it paid dividends to J and W in addition to the remuneration it paid them for their respective services.


The inspector of taxes assessed J to tax in respect of the dividend paid to W in the 1999/2000 tax year on the basis that the arrangements that they had made when X was formed constituted a settlement within section 660G(1) of the 1988 Act comprising the share in X registered in W's name, and that therefore the dividend paid to W was income arising under that settlement so that it was deemed pursuant to section 660A(1) to be the income of J.


J submitted that the arrangements between himself and W did not constitute a settlement because they did not contain the 'element of bounty' required by the decided cases; if there was such an element of bounty, then the acquisition by W of her share came within the exemption for outright gifts between spouses in section 660A(6) of the 1988 Act.


Malcolm Gammie QC, Keith Gordon (instructed by Nelsons) for the appellant; Rupert Baldry (instructed by the Revenue and Customs solicitor) for the respondent.


Held, the question of whether there was a settlement within the statutory definition depended on identifying the relevant arrangement and ascertaining whether at the time it was made it involved any element of bounty (Inland Revenue Commissioners v Plummer [1980] AC 896 applied).


There was no doubt that the arrangement included the acquisition by W of her share in X. That acquisition on its own was for full value in the context of a joint business venture to which both parties made substantial and valuable contributions, and there was therefore no element of bounty.


The arrangement also included the corporate set-up under which J held the other share and was the sole director. That gave him the ability to confer benefit but of itself did not do so. Accordingly, that addition made no difference because the corporate set-up was no more 'bounteous' than the acquisition by W of her share.


The bounty on which the Revenue relied was that provided subsequently by the combination of the provision of J's services at a profit and the payment of dividends. Those elements could not be included in the arrangement. They did not form any part of a structure of things or combination of objects; their uncertainty and fluidity were the converse of an arrangement. Without those elements, there was no element of bounty and no settlement within the statutory definition. The payment of modest salaries and the declaration of dividends were not arranged in advance and were not part of the arrangement.


The fact that a structure being set up might lend itself in future to some tax mitigation was irrelevant to the existence of an element of bounty (Crossland v Hawkins (1960) 39 TC 493, Mills v Inland Revenue Commissioners (1974) 49 TC 367, Butler (HMIT) v Wildin (1988) (see [1988] Gazette, 14 December, 43), Copeman v Coleman (1939) 22 TC 594, Inland Revenue Commissioners v Payne (1940) 23 TC 610 and Young v Pearce (1996) 70 TC 331 distinguished). Accordingly the dividends paid to W on her share were not income arising under a settlement as defined in section 660G(1).


If there was a settlement, then there was far more comprised in the arrangement than would be covered by the expression 'an outright gift' within section 660A(6). The property given, namely the share, was more than a right to income within section 660A(6).


Appeal allowed.





PERSONAL INJURY


Negligence - civil procedure - case management directions - fraud - multi-track - road traffic accidents

Alan Mark Kearsley v Daniel Klarfeld: CA (Civ Div) (Lords Justice Brooke (vice-president), Dyson, Carnwath): 6 December 2005


The appellant (D) appealed against an order made in a personal injury action brought by the respondent (C) allowing the case to be assigned to the multi-track with a time estimate for trial of two days.


C brought the claim against D for damages for a soft tissue whiplash injury allegedly sustained following a road traffic accident, where both cars were stationary but D's foot slipped off the clutch causing his car to hit C's car. C relied on the expert evidence of a GP. D relied on expert evidence from a consultant orthopaedic surgeon and from an expert engineer that such injury could not have been sustained following such a low-velocity impact.


Accordingly, D alleged that C was making a fraudulent claim and put him to strict proof. Standard case management directions were given for the trial and the case was allocated to the fast-track in accordance with requests from both sides, with a one-day time estimate for trial. Shortly afterwards, both parties sought allocation of the case to the multi-track and a new estimate of two days for the trial on the basis that an allegation of fraud was serious and could only properly be dealt with by the parties calling their expert evidence. D further sought permission to call an orthopaedic surgeon in place of his GP expert.


The district judge rejected the applications on the basis that it was a claim of relatively low value that would come down to the credibility of C as a witness at trial. An appeal against that order was allowed by the judge.


Mark Turner QC, Paul Higgins (instructed by Horwich Farrelly) for the appellant; Benjamin Williams (instructed by Coyne Learmonth) for the respondent.


Held, the judge was correct to overrule the district judge and to re-allocate the claim to the multi-track on the basis that an allegation of fraud was a matter to be taken seriously and there needed to be a proper examination of the issues at trial. Owing to pressures of time at the hearing, the district judge had not adequately addressed the question of whether the case could be dealt with justly on the fast-track or whether, because fraud was alleged, it was necessary in the interests of justice for the experts to attend so that the judge could unravel their contested evidence.


The district judge had also failed to consider the desirability of equality of arms. Both parties had altered their stance since the original directions were made, so that a one-day trial in the fast-track would not achieve justice. By the nature of the issues raised by D, the expert witnesses had to be called to give oral evidence if justice was to be done. The judge was also entitled to allow C to call an orthopaedic expert in the unusual circumstances that C's GP expert was not well qualified to match D's orthopaedic expert. Once the judge had overruled the district judge, he was entitled to give directions that would ensure that the parties were on a level playing field.


The practice that had emerged in low-velocity impact litigation of requiring the defence to include a substantive allegation of fraud or fabrication was not necessary. It was sufficient to set out fully any facts from which the defence would be inviting the judge to draw the inference that the claimant had not in fact suffered the injuries he asserted (John Edward Cooper v P & O European Ferries (Dover) Ltd [1999] 1 Lloyd's Rep 734 considered). There was no burden on the defence to prove fraud and the defendant did not have to put forward a substantive case of fraud to succeed so long as he followed the rules in rule 16.5 of the Civil Procedure Rules.


In cases such as this, the claimant's advisers should offer the defendant's insurer access to the claimant's vehicle for the purpose of early examination, and give early disclosure of any contemporaneous GP's or other relevant medical notes to enable the defendant's insurer to obtain relevant evidential material expeditiously and inexpensively.


In turn, it might be desirable for the defendant's insurer to state at an early stage that it regards the claim as a low-velocity impact case in which it would be seeking more expensive advice than the claim would justify.


Appeal dismissed.