Negligence


Asbestos - dock workers - duty of care - employers' duties - proximity - special relationships

(1) Winifred Rice (executrix of the estate of Edward Rice, deceased) (2) Robert Francis Thompson v (1) Secretary of State for Trade & Industry (2) Stuntbrand Line Ltd: CA (Civ Div) (Lords Justice May, Keene, Lady Justice Smith): 4 April 2007

The appellant secretary of state appealed against a decision ([2006] EWHC 1257) on a preliminary issue that the National Dock Labour Board (N) owed the respondents (R and T) a duty of care to take reasonable steps to protect their health and safety in respect of work carried out by them as registered dock workers.



R and T worked at Liverpool docks between 1955 and 1967, and 1966 and 1967 respectively. Their work involved unloading hessian sacks containing asbestos from ships. No precautions were taken by or on behalf of the workers undertaking such work.



The secretary of state was the statutory successor to N's obligations. At the time when R and T worked at the docks, N operated a scheme derived from section 1 of the Dock Workers (Regulation of Employment) Act 1946. Section 1(2)(d) of the Act enacted that the scheme might provide for making satisfactory provision for the training and welfare of dock workers. When a dock worker was unloading a ship, he would be employed by a registered employer and paid by N as agent for the employer. When a dock worker was not working for a registered employer, he was in the employment of N.



R and T suffered asbestos-related illnesses and R died as a result. Consequently, R and T brought a claim in negligence against N, alleging that their illnesses were caused by N's breach of a duty of care owed to them. A preliminary issue as to whether N owed a duty of care to R and T was decided in R and T's favour. The secretary of state submitted that the judge gave an unduly wide meaning to the words 'training and welfare', as the term did not require N to make satisfactory provision for the health of dock workers, and there was no statutory duty on N to take steps to protect dock workers from the harmful effects of asbestos when they were working for and employed by registered employers, and N had no power to require registered employers to protect their employees; and that the judge wrongly imposed a common law duty of care on a statutory body to take positive action, when the statutory body could not be made liable for any breach of statutory duty.



Held, under N's scheme, 'port medical services' were included within the scope of 'welfare' and the word 'welfare' was broad enough to include, in an appropriate context, questions relating to the dock workers' health. On the judge's findings, N had medical officers who concerned themselves with matters relating to dock workers' health. Therefore, N had a statutory duty to make satisfactory provision for the health of registered workers insofar as it was affected by their employment as dock workers.



The bald proposition that a body created by statute could not be recognised as owing a common law duty of care was untenable, Stovin v Wise [1996] AC 923 and Gorringe v Calderdale MBC [2004] UKHL 15, [2004] 1 WLR 1057 considered. The question of whether N owed R and T a relevant duty of care turned on the relationship between N and the dock workers whom it managed. Where there was a sufficient relationship of proximity, it was fair, just and reasonable that a duty of care should be imposed. To determine whether to do so, it was necessary to focus on the particular facts and statutory background of the case. The general statutory background was that of post-war necessity to keep the docks operating properly, but part of the statute was clearly aimed at protecting the health of dock workers in N's employment.



N and dock workers did not have a conventional employer/employee relationship. The relationship was peculiar to N's scheme and the way it operated Liverpool docks. However, for some purpose and for some part of the time, N was the employer of the dock workers. When R and T were unloading the asbestos, there was no satisfactory provision in place apart from N's scheme, so that N was obliged to provide it as part of its relationship with the dock workers, which was akin to one of employment and in part was actual employment. N knew or ought to have known that unloading asbestos in hessian sacks carried a serious risk of serious injury to the workers' health. In those circumstances, the policy of the statute could only be seen as enabling a relationship such that the law should impose a common law duty of care. It was fair, just and reasonable to impose such a duty on N, which was a specific duty requiring N to protect their individual employees against a known serious risk to their health.



Appeal dismissed.



Michael Kent QC, Michael Rawlinson (instructed by Beachcroft) for the appellant; John Hendy QC, Jonathan Davies (instructed by John Pickering & Partners) for the respondents.





Consumer



Agents' fees - conflict of interest - consumer credit agreements - credit brokers - disclosure - informed consent - interest

Wilson & Anor v Hurstanger Ltd: CA (Civ Div) (Lords Justice Waller, Tuckey, Jacob): 4 April 2007
The defendant borrower (W) appealed against a decision that a loan agreement entered into with the claimant lender (H) contained a prescribed term correctly stating how he was to discharge his repayment obligations. H appealed against a finding that the agreement did not state the amount of each repayment to be made.



W had applied for the loan through a broker (B). One of the loan agreement documents signed by W authorised payment of an administration fee to H of £295 out of the loan proceeds. It stated that H could agree to defer collection of that sum until the date of termination of the agreement, and that if it did, the sum would continue to bear interest at 1.29% per month. Another document advised that H paid commission to brokers in certain circumstances. B was paid a commission of £240. W argued that the agreement did not state how the £295 was to be repaid, contrary to paragraph 5 of schedule 6 of the Consumer Credit (Agreements) Regulations 1983, because although it provided that the £295 became payable on completion of the loan, the pre-contractual documentation evidenced an agreement to defer collection of that sum until the date of termination.



W submitted that schedule 6 required the agreement to provide a single term that told the debtor how his obligations were to be discharged: it was not permissible for it to provide different ways for repayment. Or, if that argument was wrong, at least the amount to be repaid had to be stated. H argued that the agreement complied with paragraph 13 of schedule 1 because it expressed the repayment as a sum of money: it required payment of £295 on completion, and the recorder had been wrong to conclude that there had been any agreement to defer collection until after completion. H argued, in the alternative, that the requirement to pay interest was a statement of a specified proportion of a specified amount, in compliance with paragraph 13(c) of schedule 1.



In relation to the issue of whether H had paid a secret commission to the broker, W contended that the disclosure had been entirely inadequate and did not negate secrecy. H contended that there had been sufficient disclosure: secrecy had been negated by informing W that commission might be paid, and the payment did not become secret simply because W was not given the actual details of the amount paid.



Held, paragraph 5 of schedule 6 gave a significant degree of flexibility about the way in which the agreement could deal with the debtor's obligations. The requirement was simply to state how the debtor was to discharge his obligations. There was no express requirement to state the amount of any repayment, provided that the agreement otherwise stated what was required by paragraph 5, McGinn v Grangewood Securities Ltd [2002] EWCA Civ 522, (2002) The Times, 30 May considered.



The requirements of paragraph 13 of schedule 1 were more precise and demanding than those of paragraph 5 of schedule 6. The recorder had found as a fact that the pre-contractual documentation evidenced an agreement to defer collection of the £295. That conclusion was unassailable. Consequently, the agreement did not state the amount of the repayment as a sum of money because a repayment of £295 plus interest at 1.29% per month was required. It could not be argued that the requirement to pay interest was a statement of a specified proportion of a specified amount. The interest was only stated as a rate. It did not inform W of the amount to be repaid, but left the calculation to him. That was not sufficient for the purposes of paragraph 13 of schedule 1.



H had not paid B a secret commission, but had procured B's breach of fiduciary duty by failing to obtain W's informed consent to the payment. The relationship between W and B was a fiduciary one, and as a fiduciary, B had to be loyal to W. B had, by agreeing to accept a commission from H, put himself into a situation where he had a conflict of interest. An agent who received commission without the informed and positively shown consent of his principal would be in breach of fiduciary duty.



Borrowers like W who came to the non-status lending market were likely to be vulnerable and unsophisticated. A statement of the amount of commission that a broker was to receive was necessary to draw attention to the potential conflict of interest. The document that W had signed negated secrecy, but it should have informed W that a commission was to be paid and detailed the amount, in terms which made it clear that W was being asked to consent. It should have been accompanied by a warning to the effect that its payment to the broker might mean that he had not been in a position to give unbiased advice.



W had a claim for equitable compensation against H, and was entitled to interest on the £240 from the date it was received plus simple interest at 1.29%. It was not appropriate to rescind the loan agreement and its related legal charge on W's property. They were both fair and enforceable except for the £295.



Appeals allowed in part.



Bradley Say (instructed by Heer Manak) for the defendants; Thomas Seymour (instructed by Butcher Burns) for the claimant.





Employment



Findings of fact - fixed-term contracts - transfer of undertakings - existence of economity

Wain & Ors v Guernsey Ship Management Ltd: CA (Civ Div) (Lord Justice May, Lady Justice Arden, Lady Justice Smith): 3 April 2007
The appellants (W) appealed against a dismissal of their claims that their employment had been transferred to the respondent (G), pursuant to a transfer of an undertaking to which the Transfer of Undertakings (Protection of Employment) Regulations 1981 applied.



W had each been employed on short-term contracts, which were renewed from time to time, by a company (X) that supplied personnel for ferry operations. They each did different jobs and worked on different vessels. X decided to employ only permanent employees; short-term workers would be supplied by G. G then offered W the same work that they had carried out for X, but on a lower rate of pay.



W commenced proceedings, claiming that the short-term contract employees were an economic entity that had been transferred to W as an undertaking, and that under the regulations the terms of their contracts of employment, including rate of pay, were preserved after the transfer. The employment tribunal found that the sub-group of short-term contract employees was not an economic entity, and that their claim failed. The Employment Appeal Tribunal decided this was a finding of fact that the tribunal had been entitled to make. W argued that the findings of fact had been wrong; that the employees were a discrete part of X's business; that their common role and position in X's business made them into an economic entity, and the fact that they did not perform the same work did not prevent that.



Held, although W could be said to belong to a group that could be identified because all members had short-term contracts and fulfilled a specific role in X's business, they all did different work on different vessels. Neither factor was conclusive, and the tribunal had been entitled to hold that the group was not an economic entity, Cheesman v R Brewer Contracts Ltd [2001] IRLR 144 applied.



Appeal dismissed.



John Hendy QC, Colin Bourne (instructed by Bridge McFarland) for the appellants; James Goudie QC, James Cornwell (instructed by Simpson & Marwick) for the respondent.





Costs



Account of profits - costs orders - damages - delay - discretion - part 36 offers - split trials

Shepherds Investments Ltd v Andrew Walters & Ors: CA (Civ Div) (Lords Justice Mummery, Toulson, Lady Justice Smith):

3 April 2007
The appellant company (S) appealed against an order reserving the issue of costs until after the outcome of an account of profits in its claim against the respondents (W).



After an order for a split trial, the first three of W, formerly directors or employees of S, were found to have acted in breach of fiduciary duty and of contract. The judge held that not all of S's claims were made out and that S could establish no loss. S elected for an account of profits and W denied there were any relevant profits. The judge subsequently rejected S's submission that W should be ordered to pay all the costs of the trial on an indemnity basis, and reserved the issue until after the determination of the account of profits.



Before the trial, S's solicitors had written to W's solicitors stating, in a section headed 'Part 36 settlement offer', that S would pursue litigation vigorously, but would accept £1 in full and final settlement of the identified claim, plus costs to the date of acceptance, where its costs to date amounted to £99,230. W did not accept the offer and the trial judge held that it was not a valid offer under part 36 of the Civil Procedure Rules (CPR) because it included a term as to costs. S made subsequent offers without prejudice save as to costs, but no other under part 36. S submitted that the judge had misconstrued the offer to settle, which was clearly an offer in accordance with part 36, and that had undermined the exercise of his discretion, in which he had erred by not making an immediate order against W for indemnity costs.



Held, this case was not a proper one in which to disturb the judge's discretion, the scope of which, under part 44 of the rules, entitled him to make a variety of orders where there was a split trial. The judge was not required by the rules to make an immediate decision on costs, and he had a discretion to postpone it until quantum had been finally determined. There might be circumstances in which it was proper to exercise judicial discretion by reserving or adjourning the question of costs, pending the final resolution of all outstanding issues, including the amount of damages or an account of profits, Weill v Mean Fiddler Holdings Ltd [2003] EWCA Civ 1058, HSS Hire Services Group Plc v BMB Builders Merchants Ltd (Costs) [2005] EWCA Civ 626, [2005] 1 WLR 3158, and Intense Investments Ltd v Development Ventures Ltd [2006] EWHC 1628 (TCC) applied.



As for the offer to settle, it was not necessary for either this court or the trial judge to interpret it, as the point was not determinative of the question as to when the latter should exercise his discretion; it was relevant as to who should pay the costs when the judge decided to exercise that discretion. The letter should be interpreted by the judge who decided the costs after the account of profits. It was reasonably arguable that it was a valid part 36 offer to settle.



Appeal dismissed.



For related proceedings see Shepherds Investments Ltd v Walters [2006] EWHC 836 (Ch), [2007] IRLR 110.



Paul Nicholls (instructed by Dechert) for the appellant; Iain Quirk (instructed by Eversheds) for the respondents.





Torts



Damages - deceit - mother's fraudulent representations made as to child's paternity

A v B: QBD (Sir John Blofeld):3 April 2007
The claimant (C) claimed damages for deceit allegedly perpetrated by the defendant mother (B). C and B had begun a relationship, and two years later B had a child (Y). C had always believed he was Y's father and had provided financial support for both B and Y. When the relationship ended, C began family proceedings for a parental responsibility order and for contact. B disputed that C was the father and requested that C have a DNA test. The test revealed that C was not B's biological father.



C issued proceedings on the basis that, from the time B had discovered she was pregnant, she had assured him that he was Y's father and that she had never had sexual relations with any other man. C contended that he had provided financial support for both B and Y based on B's representations to him that he was Y's father. B contended that there was insufficient evidence to prove that C had suffered damage as a result of acting on the fraudulent representation.



Held, all the ingredients of the tort of deceit were made out. B had made representations on many occasions; those representations were untrue and B knew they were untrue. They had been made fraudulently and had been made with the intention that C should rely on them. As a result of the fraudulent representations, C had suffered damage. While it might be that human actions had a number of different motives, C had made payments because he was motivated by the fraudulent representations; he had made no payments before then and none after the result of the DNA test was known. C's distress was real and it was not contrary to public policy to award general damages. C was also entitled to special damages for money spent on B but not for any money spent for the sole benefit of Y or for any sums expended that had benefited Y, McFarlane v Tayside Health Board [2000] 2 AC 59, and P v B (Paternity: Damages for Deceit) [2001] 1 FLR 1041 considered.



Judgment for claimant.



John Sabido, Laura Barrie (instructed by Ellen Windsor) for the claimant; Simon Calhaem (instructed by Aitchison & Co) for the defendant.





Insolvency



Applications without notice - bankruptcy - committal proceedings - right to liberty and security

Neil Francis Hickling v Timothy Darren Baker: CA (Civ Div) (Sir Anthony Clarke (Master of the Rolls), Lords Justice Rix, Lloyd):4 April 2007
The appellant undischarged bankrupt (B) appealed against an order committing him to prison under section 364(2)(c) of the Insolvency Act 1986 for failure and refusal to co-operate with the respondent trustee in bankruptcy (H).



B had been made bankrupt and not been discharged in the ordinary way because H had obtained an order under section 279(3) of the Act suspending discharge, on the ground that B had not co-operated with H. According to H, B had continued in his failure and refusal to co-operate. Several orders had been made for the search of premises, and seizure of assets found there, but H contended that B remained intransigent and determined not to give accurate information about his assets.



Accordingly, H had applied under section 364 without notice to B for the court to exercise its power of arrest. The application was supported by two witness statements made by H. H's second witness statement contained material that he did not wish B to see at that stage. Therefore the judge was asked to, and did, make an order precluding its inspection by anyone, including B, without further order of the court. The judge committed B to prison on the basis that there were reasonable grounds for believing that he had concealed and would conceal goods, papers and records to which H was entitled.



B submitted that the drastic power conferred by section 364 had to be exercised in a manner that conformed with article 5 of the European Convention on Human Rights, both as regards the circumstances in which the order was made and as regards the terms of the order.



Held, it could not be successfully argued that section 364 was in itself incompatible with article 5. The question was as to the manner of the exercise of the power given by the section.



It was compatible with article 5 and otherwise lawful for the application under section 364 to be made without notice. Notice to the respondent of an application under section 364 was not an essential prerequisite where reliance was placed on section 364(2)(c) any more than it was where the person in question was likely to abscond or had failed to attend for examination.



The evidence put before the court on an application under section 364 made without notice should specifically address the reason why it was appropriate for the application to be heard without notice having been given. The evidence before the judge did not satisfy that requirement.



In the case of an order under section 364 made without notice, the person arrested ought to be brought before the court promptly after his arrest for a hearing at which both parties are represented. The order in this case included no provision of that kind. It was made in what had been the standard form for many years. It ought to have required that B, once arrested and in the custody of the prison governor, be produced to a judge for directions to be given in the matter. Thus the order was not in terms that were appropriate having regard to article 5 and to the fact that the order had been made without notice.



The order under section 364 did not have to specify the particular obligation, the fulfilment of which was said to be the justification for the arrest. The nature of the case had to be made clear to the arrested person, and to that end any order under section 364 should, as this one did, include a recital, showing the basis on which the court was satisfied that it could make the order.



It was not necessary to decide the point, but it was doubtful whether the withholding of evidence could ever be justified on an application under section 364, even though it was an established practice in the case of applications to exercise the court's power to order persons to attend for examination.



Appeal allowed.



Stephen Moverley Smith QC, David Herbert (instructed by Challinors) for the appellant; Jonathan Crow QC, Raquel Agnello, Thomas Robinson (instructed by Stephenson Harwood) for the respondent.