Contract terms – Disclosure – Miners – Vibration white finger

Brian Strydom v Vendside Ltd: QBD (Mr Justice Blair): 18 August 2009

The appellant (S) appealed against a decision dismissing his claim for recovery of a payment made by him to the respondent (V).

S had made a claim for vibration white finger (VWF) injuries sustained through his employment as a miner. The claim was processed by V, a claims handling company owned by a miners’ union, pursuant to a conditional fee agreement. S was required to agree to pay a fee if successful in his claim because he was not a fully paid-up member of the union. Due to the large number of VWF claims being made by miners, a national scheme for processing and settling VWF claims had been established and the government entered into a claims handling agreement (CHA) with V. The agreement provided that, if V successfully settled a claim, it was entitled to payment of a handling fee from the government. The CHA did not prevent V from charging claimants it represented a fee. V settled S’s claim and received a fee from S and under the CHA. Upon discovering that V had received a fee under the CHA, S sought to recover the fee that he paid V. A county court held that the fee was not recoverable. In particular, it held that a simple contract existed between the parties and that there was no basis for implying into that contract a term, asserted by S, requiring V to disclose to S the fact that it was also receiving a fee under the CHA, non-compliance with which term would result in breach of contract or breach of common law duty. The county court also held that, while there was inequality of bargaining power between S, as a former miner looking for advice and trusting a union to look out for his interests, and V, handling claims such as S’s on its own terms and for its own benefit, V’s behaviour was not unconscionable and the outcome was not oppressive to S. S contended that the county court erred in: (1) treating the contract as a simple contract and failing to appreciate that his case was that V was under an implied duty not to misrepresent by statement or omission S’s liability for the cost of pursuing the claim; (2) finding that the bargain struck between he and V was not unconscionable.

Held: (1) While the contract between S and V was not a typical commercial arrangement and had some features which were probably unique, that did not mean that the question of implication of terms was within the court’s discretion, or that the court had power to introduce terms to make the contract fairer or more reasonable. S had not suggested that he was entitled to rescind the contract on the basis of a misrepresentation as to fees. Nor had he relied on a freestanding duty of disclosure. Nor had he suggested that the relationship between the parties was a fiduciary one. The question the county court was asked to decide was whether the asserted term was necessary to give the contract efficacy. The county court was correct to find that such a term went far beyond what was necessary in what was, in essence, a simple contractual arrangement. Accordingly, the legal threshold for the implication of terms was not satisfied and the county court was right so to hold.

(2) Before a court would consider setting a contract aside as an unconscionable bargain, one party had to have been disadvantaged in some relevant way as regards the other party, that other party had to have exploited that disadvantage in some morally culpable manner, and the resulting transaction had to be overreaching and oppressive. No single one of those factors was sufficient and all three had to be proved as otherwise the enforceability of contracts would be undermined. The county court was clearly entitled to find that, on the facts as they were at the time the contract between S and V was entered into, and from the perspective of S as a disadvantaged contracting party, the contract was not oppressive. The fact was that S had had to pay a fee because he was seeking union representation and was no longer paying his union dues, the fee was payable only in the event of a successful settlement, and it was capped. Although V also received a fee under the CHA, and V’s activities under the CHA had turned out to be very profitable given the number of claims that were handled, any legitimate public concern on that ground did not render the contract ‘oppressive’ in the legal sense regarding S.

Appeal dismissed.

Robert Glancy QC (instructed by Mishcon de Reya) for the appellant; James H Allen QC, David Rose (instructed by Brooke North) for the respondent.