Contracts


Breach of contract - causation - implied terms - package holidays - swimming pools - tour operators

James Evans v Kosmar Villa Holidays Plc: CA (Civ Div) (Lady Justice Arden, Lords Justice Hooper, Richards): 23 October 2007

The appellant tour operator (K) appealed against a decision ([2006] EWHC 3417 (Comm)) that it was liable for the personal injury claim of the claimant (E).



E was 17 years of age when he went on holiday with a group of friends to an apartment complex in Corfu. The complex was under independent Greek ownership and management but was contracted exclusively to K. Towards the end of his stay, in the early hours of the morning, E dived into the shallow end of the swimming pool at the complex, hit his head on the bottom and sustained serious injuries resulting in incomplete tetraplegia. The pool was not safe for diving and there were "no diving" signs.



The judge held K liable for the accident subject to a finding of 50 per cent contributory negligence. E submitted that it had been an implied term of the holiday contract with K that reasonable skill and care would be exercised in the provision of facilities and services at the apartment complex, including the swimming pool and its surrounds, and that the judge had been right to find that, in the circumstances, K had been in breach of the implied term, in particular in relation to the insufficiency of the "no diving" signage around the pool.



K submitted that there was no duty to guard against an obvious risk, namely that diving into shallow water or water of unknown depth might cause injury, and that on the evidence E knew of the risk and was able to assess it for himself.



Held, the judge had been wrong to hold that K was in breach of its contractual duty of care and so liable under regulation 15 of the Package Travel, Package Holidays and Package Tours Regulations 1992 for improper performance of the holiday contract. People had to accept responsibility for the risks they chose to run and there was no duty to protect them against obvious risks, Ratcliff v McConnell [1999] 1 WLR 670 and Tomlinson v Congleton BC [2003] UKHL 47, [2004] 1 AC 46 applied.



The judge had been wrong to distinguish the line of cases dealing with occupiers' liability. The extent of the duty owed by occupiers might be affected by policy considerations which had no parallel in the context of a holiday contract, but the core reasoning applied in relation not only to trespassers, but also to lawful visitors to whom a contractual duty could be owed.



That reasoning also applied to persons to whom a similar duty of care was owed under a contract of the kind that existed in the present case. K's duty did not extend to a duty to guard E against the risk of his diving into the pool and injuring himself. That was an obvious risk of which he was well aware. Although just under 18 years of age, he was of full capacity and was able to make a genuine and informed choice. He was not even seriously affected by drink.



E submitted that prominent signage was needed to reduce the risk of people in E's position reaching the wrong conclusion about the risk of diving as he had done. However, the risk in the present case remained an obvious one of which E himself was previously aware and should have been aware at the moment he dived. The fact that at that moment he acted thoughtlessly, in a brief state of inadvertence, was not a good reason for holding K to have been under a duty that it would not otherwise have owed him. There was no duty on K to give E any warning about the risk of diving into the pool or to have placed better or more prominent signs or to take any other step to prevent or deter him from using the pool or diving into it.



As a matter of causation, on the evidence it was unlikely that E would have seen or taken in more prominent "no diving" signs and it was unlikely that they would have prevented the accident.



Appeal allowed.



Graham Eklund QC (instructed by Kennedys) for the appellant; Alan Saggerson (instructed by Hugh James) for the respondent.





Intellectual Property



Amendments - entitlement - limitations - ownership - patents - references

(1) Rhone-Poulenc Rorer International Holdings Inc (2) Imclone Systems Inc (appellants) v Yeda Research & Development Co Ltd (respondent) & Comptroller of Patents Designs & Trademarks (intervener): HL (Lord Hoffmann, Lord Phillips of Worth Matravers, Lord Walker of Gestingthorpe, Lord Mance, Lord Neuberger of Abbotsbury): 24 October 2007
The appellant (Y) appealed against a decision ([2006] EWCA Civ 1094 [2007] Bus LR 1) disallowing amendments to its reference to the Comptroller General of Patents, under section 37(1) of the Patents Act 1977, of the question of the true proprietorship of a patent owned by the respondent (R).



R's patent was for a treatment for cancer involving the use of certain chemicals in combination. Y had filed a reference alleging that it should be a joint proprietor of the patent along with R, and that scientists working on its behalf should be named as co-inventors. Thereafter, after further consideration and following the decision of the Court of Appeal in Markem Corp v Zipher Ltd [2005] EWCA Civ 267, [2005] RPC 31, Y applied to amend its statement in support of the reference in two respects. The first was to add references to other rules of law upon which it relied for its title to the patent, and the second was to allege that its scientists were the sole inventors, and that the patent should be transferred into the name of Y alone. By the time the application for amendment was made, the two-year limitation period in section 37(5) had expired.



The questions for determination were what a person claiming entitlement to a patent in someone else's name had to prove: whether it was enough for him to show that he was the inventor and the registered proprietor was not, or whether he had to allege that the registered proprietor had procured registration by breach of some other rule of law; whether, after the expiry of the two-year limitation period, a person could amend a claim for joint entitlement to make it a claim to sole entitlement.



Held, section 7(2) and 7(3) of the Act provided an exhaustive code for determining who was entitled to the grant of a patent. The first step in any dispute over entitlement was to decide who the inventor of the claimed invention was. The inventor was the actual deviser of the invention. The effect of section 7(4) was that a person who sought to be added as a joint inventor bore the burden of proving that he contributed to the inventive concept underlying the claimed invention, and a person seeking to be substituted as sole inventor bore the additional burden of proving that the inventor named in the patent had not contributed to the inventive concept.



There was nothing in the statute that said that entitlement depended on anything other than being the inventor. There was no justification, in a dispute over who was the inventor, for importing questions of whether one claimant had some personal cause of action against the other.



While the result in Markham was the correct one, the broad principle laid down therein, that any claim to entitlement to a patent, even by someone claiming simply to have been the inventor, required reliance upon "some other rule of law", was wrong. The first set of amendments was, therefore, unnecessary.



An amendment of a claim for joint entitlement to a claim to sole entitlement did not amount to the assertion of a new claim. The commencement of proceedings under section 37(1) was not by way of making an ordinary civil claim under the Civil Procedure Rules, but was by the reference of the primary statutory question in section 37(1)(a) to the comptroller.



The statement accompanying the reference was not analogous to a claim form asserting a cause of action, and the question of whether a claim to full entitlement was a new or different claim was irrelevant. The true question was whether amendment of the statement of facts would make the reference a new one. Plainly, it would not. In the present case, the reference had been made within the two-year period, identifying the statutory questions referred to the comptroller. The comptroller was still being asked to decide those questions and it was difficult to see how any amendments to the accompanying statement could make it a different reference.



Appeal allowed.



Christopher Floyd QC, Tim Powell, Kathryn Pickard (instructed by Powell Gilbert) for the appellants; Peter Prescott QC, Daniel Alexander QC, Andrew Lykiardopoulos (instructed by Bird & Bird) for the first respondent and (instructed by Milbank Tweed Hadley & McCloy) second respondent; Michael Edenborough (instructed by the Treasury Solicitor) for the intervener.



Insurance



EC law - failure to fulfil obligations - freedom of establishment - Lloyd's names - loss - regulation

Frederick Thomas Poole & ors v HM Treasury: CA (Civ Div) (Lords Justice Buxton, Jacob, Moore-Bick): 24 October 2007
The appellant Lloyd's Names (P) appealed against a decision ([2006] EWHC 2731 (Comm), [2007] 1 All ER (Comm) 255) that they could not bring a claim against the UK government on the basis of an alleged failure to transpose the requirements of Directive 73/239 into national law.



P had suffered losses in the course of underwriting at Lloyd's. Their complaint, which had been pursued in other proceedings both against their agents and the persons who introduced them to the Lloyd's market, and against Lloyd's itself, was that the market had been inadequately regulated, thus leading to the acceptance of risks that under a proper system of regulation would not have arisen, or which would have been identified in advance.



In the present proceedings, P claimed that the UK government had wrongly failed to transpose into UK law Directive 73/239 on the coordination of national provisions on the taking-up and pursuit of the business of direct insurance. P's case was that had that Community law duty been properly discharged, the market would have been properly regulated and P's losses would not have occurred, or would have been less in extent.



The judge held that the Directive did not grant any rights to those in P's position, so that no claim by them could be based on the alleged failure to transpose it properly.



P submitted that the requisite grant of rights under the Directive could be established if they could show that some right, not necessarily the right in respect of which the proceedings were brought, would have been granted to persons in their position under domestic law if the directive had been implemented; that, in any event, implementation of the directive had been intended to confer on P the right that they asserted against the government.



Held, the obligation of the member state was to take measures to achieve the result prescribed by a Directive, Francovich v Italy (C6/90) [1991] ECR I-5357 applied. The conditions for the imposition of Francovich liability were that the result required by the Directive should entail the grant of rights to individuals; that it should be possible to identify the content of those rights on the basis of the provisions of the directive; and the existence of a causal link between the breach of the state's obligation and the loss and damage suffered by the injured parties.



The first condition was stated in terms that, read out of context, could support P's argument that any right was sufficient, even though not the right on which the claim was based. However, the second and third conditions showed that argument to be misconceived.



The second condition required the content of the rights to be specified, and that was necessary in order to determine whether the claimant had suffered a relevant loss under the third condition. Further, if one group of persons was accorded the right to sue in the national court in order to support the objectives of a directive, it was very unlikely that a different group of persons needed to be given such a right as well: on the assumption that insureds had been given rights under the Directive in relation to the regulation of the insurance market, it was not necessary for insurers such as P to be given such rights as well; and if it was not necessary for insureds to be given rights by the Directive, it followed a fortiori that it was not necessary for insurers.



One objective of the Directive was to ensure adequate protection for insured and third parties by coordinating the provisions relating to the financial guarantees required of insurance undertakings. P were not third parties in respect of insurance contracts. Nor could they be considered as insureds merely because, in the course of their business, they were reinsureds or the beneficiaries of stop-loss insurance. They did not claim in respect of losses incurred as reinsureds or as the beneficiaries of stop-loss insurance.



The Directive required the grant by the member state of a right of establishment but there was no suggestion that the UK had, in fact, infringed any Community requirement as to rights of establishment in the insurance market, and P did not claim as persons prevented or handicapped in establishing themselves in the UK market.



Further, it was impossible to say that an individual right of complaint about failures of regulation within the national market was necessary to achieve freedom of establishment. P's claims failed on the construction of the Directive, Three Rivers DC v Bank of England (No3) (Summary Judgment) [2001] UKHL 16, [2003] 2 AC 1 and Paul v Germany (C222/02) [2004] ECR I-9425 applied.



Appeal dismissed.



R Plender QC, H Mercer, G Nardell (instructed by Grower Freeman) for the appellants; D Friedman QC, J Stratford, A Henshaw (instructed by the Treasury Solicitor) for the respondent.



Employment



Comparators - detriment - equal pay - genuine material factors - indirect discrimination

V Grundy v British Airways Plc: CA (Civ Div) (Lords Justice Waller, Sedley, Carnwath): 23 October 2007
The appellant (G) appealed against the dismissal by the Employment Appeal Tribunal (UKEAT/0676/04/RN) of her equal pay claim against the respondent airline (B).



G had been employed by B as a member of its support cabin crew. Whereas members of cabin crew were on an incremental pay scale that gave them annual increases, support cabin crew had no such increments. G had identified a comparator who it was accepted was doing like work but who, as a cabin crew member, had benefited from the annual increments to which G was not entitled.



The ratio of women to men was far greater in the support cabin crew than it was in the cabin crew. However, there were a greater number of cabin crew members than support cabin crew members. Anything which impacted adversely on the support cabin crew would hurt a greater proportion of women than if it impacted on the cabin crew, but, because of the relative size of the two groups, it would hurt far fewer women in absolute numbers.



The employment tribunal had found that the pay differential was a policy, criterion or practice that was to the detriment of a larger proportion of women than men, and had gone on to hold that it was not justified.



The EAT declined to interfere with the tribunal's decision on justification. However, it held that the focus had to be on the larger, advantaged group rather than the smaller, disadvantaged group, and substituted a finding that there was no disparate impact.



G submitted that there was nothing wrong in law with the tribunal's focus on the smaller group and, alternatively, even if there was, it did not follow that the larger group was determinative, and the most the EAT could properly have done was remit the case for rehearing.



Held, the tribunal had made no error of law in focusing on the disadvantaged rather than the advantaged group. There was no principle of law which required the fact-finding tribunal always to base its test of disparity on the advantaged cohort. While there was room for argument about the precise nature of the ratio in Rutherford v Secretary of State for Trade and Industry [2006] UKHL 19, [2006] 4 All ER 577, a common theme of the majority judgments was to emphasise the fact-sensitive nature of decisions in the equal pay field and to lean against the application of general rules, Rutherford explained and Chaudhary v Secretary of State for Health [2007] EWCA Civ 789 considered.



In selecting a pool, the task of the tribunal was to identify a cohort within which the defence under section 1(3) of the Equal Pay Act 1970 could be objectively tested. The pool needed to include, but not be limited to, those affected by the contractual term of which complaint was made, which could be expressed to include both people who could and those who could not comply with it. In the present case, both contending pools had that character. Provided it tested the allegation in a suitable pool, a tribunal could not be said to have erred in law even if a different pool with a different outcome could legitimately have been chosen. The tribunal's focus on the disadvantaged group was a finding of fact which may have been debatable but which was legally impregnable.



A single majority judgment in Rutherford might have given clearer and more manageable guidance for tribunals, and where possible there should be a judgment or judgments at the appellate level which made it clear precisely what an appeal decided.



Appeal allowed.



J McNeill QC, M Ford (instructed by Simpson Millar) for the appellant; C Jeans QC, A Short (instructed by the in-house solicitor) for the respondent.