Contracts


CDS funding - CLS funding - contract terms - equal treatment - legal advice and funding - public procurement

R (on the application of the Law Society) (claimant) v Legal Services Commission (defendant) and Lord Chancellor and Secretary of State for Justice (interested party): Dexter Montague & Partners (a firm) (claimant) v Legal Services Commission (defendant): CA (Civ Div) (Lord chief justice Phillips, Lords Justice Waller, Lawrence Collins: 29 November 2007

The parties in conjoined cases both appealed against a decision ((2007) EWHC 1848 (Admin)) that the new unified contract between the LSC and solicitors wishing to undertake publicly funded work infringed regulation 9(7) the Public Contracts Regulations 2006, but did not infringe regulation 4(3). The new contract was established against a background of a programme of reform of the existing legal aid system. It contained extensive powers of unilateral amendment on the part of the LSC. It also gave solicitors' firms the right to terminate the contract if the amendments made were unacceptable. The judge below concluded that there was no breach of the requirement of transparency in regulation 4(3) because the identification and publication of the information about the parameters of the programme of reform, and thus of the amendments contemplated, enabled reasonably well-informed tenderers to interpret the scope of the amendments which were contemplated in the same way. He also found that the possibility of amendment was clearly stated in the contract documents. The issues for determination were (i) the relevant principles laid down by Council Directive 2004/18 and the Regulations; (ii) whether it was sufficient compliance with the principle of transparency for there to be an express power of amendment in the contract; (iii) whether it made a difference that there was no competitive tendering process; (iv) the effect of the contractual provisions as to termination; (v) whether the contract satisfied the requirements of regulation 4(3) and 9(7).



Held, the award of contracts by public authorities must comply with the principles of equal treatment, non-discrimination and transparency. Technical specifications must clearly set out the requirements of the authority so that tenderers would be aware of what they were required to do under the contract. Where amendments to the tender criteria or to the contract were made after an award to one party, such amendments were liable to infringe the principles of transparency and of equality of treatment in that, had the other tenderers been aware in advance of the terms of the contract actually put in place, that might have affected the terms of their tenders, Commission of the European Communities v France (C340/02) [2004] ECR I-9845 applied and Commission of the European Communities v Belgium (C87/94) [1996] ECR I-2043 considered. It could not be argued that the principle of transparency was satisfied by an amendment power, however wide, if it was included in the contract and provided detailed procedural rules. Among the most important factors for compliance with the principle of transparency were the definition of the subject matter of the contract and need for certainty of terms. Transparency was not achieved by the fact that any exercise of the power of amendment by the LSC would have to comply with principles governing the exercise of discretionary powers by public authorities. Nor was it achieved by the fact that the parameters of the possible amendments had been published in a White Paper. The power of amendment was so wide that it amounted to a power to rewrite the contract, Commission of the European Communities v CAS Succhi di Frutta SpA (C496/99 P) [2004] ECR I-3801 applied. It made no difference that there was no competitive bidding process. The principle of transparency would not be satisfied in the present context if uncertainty as to the nature of effect of the amendments that might be made deterred, or was liable to deter, some potential service providers from entering into the contract. A power to amend would infringe the principle of equal treatment if it permitted amendments that might favour some contractors but not others. The LSC's right to amend the contract did not cease to be objectionable simply because firms which were not content with the amended terms had the right to terminate the contract. The instant case was an extreme one, where the contracting authority had reserved to itself a virtually unlimited power of amendment, subject only to some limited procedural conditions. The requirement of transparency in regulation 4(3) and 9(7) had been breached. The technical specifications in terms of performance or functional requirements were not sufficiently precise to allow an economic operator to determine the subject matter of the contract.



Appeals allowed in part.



John Howell QC, Javan Herberg, Mark Vinall (instructed by Bircham Dyson Bell) for The Law Society and Dexter Montague & Partners; Robert Jay QC, Paul Darling QC, Rhodri Williams, Sarah Hannaford (instructed by Treasury Solicitor) for the Legal Services Commission and Lord Chancellor and Secretary of State for Justice.





Family



Capital - child support - income - maintenance - calculations - repayments of director's loan

Chandler v (1) Secretary of State for Work and Pensions (2) Mandy Bishop: CA (Civ Div) (Lords Justice Latham, Dyson, Jacob): 29 November 2007
The appellant (C) appealed against a decision of a Child Support Commissioner that regular payments out of capital were to be treated as C's income for the purposes of calculating his liability for child maintenance under the Child Support Act 1991.



C was an absent parent. He was the sole director and majority shareholder in a company and had raised money for the company by mortgaging his house and lending it to the company. He took no remuneration from the company but it repaid the loan at the rate of £2,500 per month. The commissioner found that the loan repayments were 'Any other payments or other amounts received on a periodical basis' under schedule 1, paragraph 15 of the Child Support (Maintenance Assessments and Special Cases) Regulations 1992, and accordingly were to be treated as income. C argued, supported by the first respondent Secretary of State for Work and Pensions, that the Act and Regulations drew a clear distinction between capital, which was not available for maintenance, and income. They argued that 'Any other payments' in paragraph 15 was to be construed eiusdem generis with all the other forms of income in part III of schedule1 of the regulations and was limited to payments that could properly be called income in contrast to payments that were clearly just of capital. The second respondent, who was the parent with care, argued that, although paragraph 15 was confined to regular payments in the nature of income, regular payments out of a capital fund were in the nature of income.



Held, the act and regulations drew a clear demarcation between capital and income. A periodical drawdown of capital was not 'income' and was not 'Any other payments or other amounts received on a periodical basis' within paragraph 15. Paragraph 15 was a sweep-up provision for other kinds of income not specifically dealt with in other provisions and had to be read in that context. If Parliament had wanted to include periodic drawdown of capital it could have so provided. The matter was remitted for a fresh determination.



Appeal allowed.



Martin Blount (instructed by Dutton Gregory) for the appellant; Zoe Leventhal (instructed by the Solicitor for Department of Work and Pensions) for the first respondent; Richard Drabble QC, James Willan (instructed by Leigh Day) for the second respondent.





Human Rights



Free movement of goods - freedom of assembly and association - freedom to provide services - hunting - justification

R (on the application of Countryside Alliance and Ors v Attorney General and Anor: HL (Lord Bingham of Cornhill, Lord Hope of Craighead, Lord Rodger of Earlsferry, Baroness Hale of Richmond, Lord Brown of Eaton-under-Heywood): 28 November 2007
The appellants (H and E) appealed against a decision ((2007) EWCA Civ 817) that the Hunting Act 2004 was neither incompatible with the European Convention on Human Rights 1950 nor inconsistent with the EC Treaty (Nice).



The Act prohibited the hunting with dogs of certain wild mammals, including foxes and hares. H included those involved in hunting for their occupation or livelihood, and landowners who either permitted hunting across their land or managed their land for that purpose. E included Irish dog breeders who had formerly sold their dogs in the UK, and UK providers of livery services and hunting-based holidays for those visiting from other EU member states. H argued that the hunting ban infringed their rights under article 8 of the Convention because it adversely affected their private life, cultural lifestyle, the use of their home, and would result in the loss of their livelihood. They submitted that the Act infringed their rights under article 11 to assemble and associate to hunt foxes, and interfered with their property rights under protocol 1 article 1. They also argued that the Act subjected them to adverse treatment, on the grounds of their 'other' status under article 14 compared with those who did not wish to hunt. E contended that the Act was inconsistent with article 28 and 49 of the EC Treaty and sought references to the European Court of Justice on the issues of whether a national measure prohibiting the economic activity of hunting within the territory of a member state engaged article 28 in circumstances where the prohibition had the predictable effect of diminishing the market for a product used wholly or mainly for that activity and thereby eliminated or reduced cross-border trade in that product, and whether a national measure prohibiting hunting within the territory of a member state engaged article 49 in circumstances where, as a predictable consequence of the prohibition, providers of hunting-related services were prevented from providing such services.



Held, the instant case was far removed from the values that article 8 existed to protect. Fox hunting was a very public activity. H's references to notions of privacy, personal autonomy and choice were so remote from the instant case as to give no helpful guidance, Pretty v United Kingdom (2346/02) [2002] 2 FLR 45 and Peck v United Kingdom (44647/98) [2003] EMLR 15 distinguished. It was one thing to recognise that the meaning of 'home' should not be too strictly defined, but was quite another to suggest that the expression could cover land over which the owner permitted a sport to be conducted that would never in any ordinary usage be described as 'home', Niemietz v Germany (A/251-B) [1993] 16 EHRR 97 and Giacomelli v Italy (59909/00) [2007] 45 EHRR 38 considered. H's position was no different from that of other people who wished to assemble in a public place for sporting or recreational purposes. It fell well short of the kind of assembly whose protection was fundamental to the proper functioning of a modern democracy. Article 11 was not therefore engaged. Even were article 8 and 11 engaged, the interference would be justified since it was in accordance with the law, was for the protection of morals and was necessary in a democratic society. There were many who did not consider that there was a pressing social need for the hunting ban, but a majority of the country's democratically elected representatives had decided otherwise. The democratic process was liable to be subverted if, on a question of moral and political judgment, opponents of the Act achieved through the courts what they could not achieve in Parliament. The Act was proportionate to the end that it sought to achieve. Although the Act did not deprive H of their possessions, it did restrict the use to which certain property could be put. That interference was, however, justifiable, and respect had to be paid to the recent and closely considered judgment of Parliament. Even if H had been the subject of adverse treatment compared with those who did not hunt, such treatment could not be linked to any personal characteristic of any of the appellants or anything that could meaningfully be described as 'status'. Article 14 was not therefore engaged. While the court inclined to the view that article 49 of the EC Treaty was engaged, the matter was not acte clair. Moreover, although the Court of Appeal had concluded that the Act did not engage article 28, it was hard to say that such a conclusion was clear beyond the bounds of reasonable argument. However, no good purpose would be served by seeking a preliminary ruling from the ECJ if the hunting restrictions were justified on the grounds of public policy under article 30 and 46. The Act was a measure of social reform not directed to the regulation of commercial activity and was justifiable, Omega Spielhallen- und Automatenaufstellungs-GmbH v Bundesstadt Bonn (C36/02) [2004] ECR I-9609 considered. The interference with free movement of goods and services between other member states was incidental. Taken overall, the prohibitions satisfied the requirement of proportionality in accordance with community law.



Appeals dismissed.



Richard Gordon QC (instructed by Clifford Chance) for the appellant H; David Anderson QC, Marie Demetriou (instructed by Clifford Chance) for the appellant E; Philip Sales QC, Jason Coppel (instructed by the Treasury Solicitor) for the respondents; Rabinder Singh QC, Kate Cook (instructed by In-house solicitor) for the intervener.





Civil Procedure



Abuse of process - construction contracts - part 20 claims - striking out

Aldi Stores Ltd v (1) WSP Group plc (2) WSP London Ltd (3) Aspinwall & Co Ltd: CA (Civ Div) Lords Justice Longmore, Thomas Wall: 28 November 2007
The appellant company (L) appealed against a decision ((2007) EWHC 55 (TCC), (2007) BLR 113) to strike out its claim as an abuse of process. A building company (H) had built stores for L and another retailer (B) at a site in Luton. The respondents (W and S) had been retained as engineering and environmental consultants respectively. H, W and S all gave warranties under seal to the effect that they had properly performed their obligations. The store buildings suffered from differential settlement causing damage. L brought proceedings against H which went into administration. W and S were joined as part 20 defendants. B and the site owner (G) also brought proceedings to which W and S became parties. L obtained a judgment against H and tried to enforce it against H's liability insurers. Meanwhile, B's and G's actions and the part 20 proceedings were heard together and settled during trial. The primary layer insurers indemnified H, but the excess layer insurers declined to pay. Proceedings by L against the excess layer insurers were settled on the basis that they refunded the premium. L then issued proceedings against W and S alleging breach of the warranties given under seal. The judge struck out L's claims against W and S on the basis that L should have pursued them in the original action. L submitted that: (1) there was a threshold requirement before the proceedings could be struck out as abusive that there was a sufficient degree of identity between the defendants to the original action and the defendants to the new action; (2) a distinction had to be drawn between previous litigation where the case was settled and where the case had proceeded to judgment.



Held, the court should adopt a broad merits-based approach when considering an application to strike out a claim on the basis that it was an abuse of process because the claim could and should have been brought in previous proceedings, Johnson v Gore Wood & Co (No1) [2002] 2 AC 1 applied. The fact that the defendants to the original action and to the new action were different was a powerful factor, but did not operate as a bar to a finding of abuse, Dexter Ltd (In Administrative Receivership) v Vlieland-Boddy [2003] EWCA Civ 14, (2003) 147 SJLB 117 applied. No distinction should be drawn as a matter of law between cases where the original action concluded by settlement and where it concluded by judgment. The decision of the judge was not the exercise of a discretion. It was a decision involving the assessment of a large number of factors to which there could only be one correct answer to whether there was or was not an abuse of process. Nonetheless, an appellate court would be reluctant to interfere. However, the judge had reached a decision which was impermissible, by taking into account factors which he should not have done and omitting factors which he should have taken into account. The claims L wished to pursue against W and S could have been brought by L in the original action it brought against H. However, as was made clear in Johnson v Gore-Wood, the fact that a claim could have been raised in the original action did not mean it was necessarily abusive to raise it in a second action. The judge did not adequately take into account the facts that it could not be said that L had behaved in any way culpably or improperly; that L's own position was a difficult one, faced as it was with an assertion by the insurers of non-disclosure which could not be satisfactorily assessed before discovery in the action against the insurers; and that although W and S had been impleaded in the actions by B and G, they had not been sued by L before. It might be said that it was harassing for W and S to have to face a second action; but that was not unjust when they were facing a claim from L for the first time.



Appeal allowed.



David Thomas QC (instructed by Cobbetts) for the appellant; Michael Soole QC (instructed by Reynolds Porter Chamberlain) for the first and second respondents; Michael Douglas QC (instructed by Simmons & Simmons) for the third respondents.