A decision handed down last week further indicates the strict approach the courts are likely to apply where costs budgets are exceeded: Elvanite Full Circle Limited v AMEC Earth & Environmental (UK) Limited  EWHC 1643 (TCC).
The judge (Coulson J) refused to entertain an application to amend the approved costs budget after judgment, saying this would be a “contradiction in terms”. The judgment highlights the need to make a formal application to amend as soon as it becomes apparent that the original budget has been exceeded “by a more than minimal amount”.
On the question of whether the successful defendant could recover more than the budgeted costs, Coulson J said that whether there was good reason to depart from the budget was primarily a matter for the costs judge on detailed assessment. His view, however, was that there was no good reason for the principal increase, relating to expert’s fees. Continue reading
In a decision handed down last Friday, the High Court granted an extension of time to comply with a disclosure order but made an “unless order” that in the event of non-compliance the claim would be struck out: In the matter of Atrium Training Services Ltd  EWHC 1562 (Ch).
Since the application had been made before the deadline expired, this was not a case where the court had to apply the new rules relating to relief from sanctions under CPR 3.9 (see our Jackson reforms home page for more information). The proper approach was for the court to exercise its discretion having regard to the overriding objective under CPR 1.1, and in particular new sub-paragraph (f) which was added from 1 April to make it clear that dealing with cases justly includes “enforcing compliance with rules, practice directions and orders”.
The judge (Henderson J) said there is no doubt that “… the court will scrutinise an application for an extension more rigorously than it might have done before 1 April, and … must firmly discourage any easy assumption that an extension of time will be granted if it would not involve any obvious prejudice to the other side.” He referred to the recent decisions in Fons (see post) and Venulum (see post) as illustrating this increasingly strict approach.
At the same time, however, he noted that it is important not to go to the other extreme and “encourage unreasonable opposition to extensions which are applied for in time and which involve no significant fresh prejudice to the other parties”. He recognised, in particular, that there are some orders relating to specific stages of trial preparation (eg. disclosure, witness statements, expert evidence) where there may be so many imponderables when the order is made that the date for compliance cannot sensibly be regarded as written in stone, and so reasonable extensions of time may be needed as the matter develops.
This decision is a further indication of the court’s increased emphasis on compliance with court orders, albeit tempered with a welcome recognition that there may be a need for flexibility in some cases. Where the balance will be struck in a given case will depend on all the circumstances, including the stage at which the order was made and a party’s history of compliance or otherwise.
The Supreme Court has confirmed that a court can in very limited circumstances pierce the corporate veil. According to Lord Sumption, the principle applies when a person is under an existing legal obligation or liability or is subject to an existing legal restriction which he deliberately evades or whose enforcement he deliberately frustrates by interposing a company under his control. The veil can be pierced only for the purpose of depriving the company or its controller of the advantage they would otherwise have obtained by the company’s separate legal personality: Prest v Petrodel Resources Limited & Others  UKSC 34.
There have been a number of cases over the last 80 or so years suggesting the corporate veil can be pierced, but they haven’t always been easy to reconcile. This has led to uncertainty over whether there is such a principle and if so when it applies. In the recent Supreme Court decision in VTB Capital v Nutritek the court declined to give guidance as it was not required for the purposes of determining that case (see post). There are differences of opinion in Petrodel amongst the seven Justices. Lord Walker expresses doubts over the doctrine’s existence. Lady Hale (with whom Lord Wilson agrees) is uncertain whether all previous cases come within Lord Sumption’s formulation. At the other end of the spectrum Lords Mance and Clarke leave open the possibility of piercing the corporate veil in circumstances beyond those envisaged by Lord Sumption. Lord Neuberger agrees with Lord Sumption but adds his own analysis to his judgment.
What seems clear, however, is that the majority of the Supreme Court acknowledge, albeit obiter, the existence of the doctrine of piercing the corporate veil and that it extends at least as far as the test formulated by Lord Sumption. Continue reading
The government’s draft Consumer Rights Bill, published today, includes proposals for a new collective action for competition claims, together with other proposals for reforming the UK regime for competition law private actions. The draft legislation follows proposals published by the government in January this year (see post).
The draft Bill will be considered by Parliament as part of the pre-legislative scrutiny process. The government’s policy paper states that, although its policy position on competition law private actions was published in January this year, it is “aware of strong and different views of stakeholders about the effectiveness and impact of these proposals”. It therefore particularly welcomes comments and views on this element of the draft Bill “to help inform a final position and ensure the outcome is as effective as possible”. Comments are requested by 13 September 2013.
The Commercial Court has confirmed that one-way or unilateral jurisdiction clauses (in which one party can bring proceedings in one jurisdiction only, whilst the other has the option to bring proceedings in other jurisdictions) are valid under English law: Mauritius Commercial Bank Ltd v Hestia Holdings Ltd and Another  EWHC 1328 (Comm). In so doing, the Commercial Court has not followed the approach of the French Cour de cassation in Mme X v Bank Privée Edmond de Rothschild (the “Mme X Case“), in which a one-way jurisdiction clause was found to violate Article 23 of the Brussels Regulation because of its potestative nature (a potestative condition being one whose satisfaction is completely within the power of one of the parties, with no mutuality of obligation) – see our previous post.
The Mme X Case caused concern amongst many commercial parties, in particular financial institutions which favour such clauses. Whilst such unilateral jurisdiction clauses may not be upheld in all jurisdictions, it is some comfort that, in a robust judgment, the Commercial Court upheld the jurisdiction clause and, obiter, concluded that even more one-sided clauses than the one before it would not violate the public policy of equal access to justice enshrined in Article 6 of the European Convention on Human Rights.
Further, although it found Mauritian law to be irrelevant, the Court nonetheless concluded that there was a good arguable case that the clause would be upheld in Mauritius notwithstanding the Mme X Case, having considered evidence that the Mme X Case was controversial, had attracted criticism both domestically and in the context of Article 23 (which requires autonomous interpretation), and is inconsistent with previous decisions of the same court. Nicholas Peacock and Hannah Ambrose comment on the decision below. Continue reading
The European Commission has today published its long-awaited proposals for the future of collective actions in the EU. The proposals take the form of a non-binding Commission Recommendation together with a Communication explaining the background (click here for links to the documents).
The Recommendation invites Member States to adopt collective redress mechanisms at national level for both injunctive and compensatory relief for breaches of EU law rights which follow a set of basic principles set out in the Recommendation. The Recommendation takes a horizontal approach, rather than proposing different mechanisms for different sectors. Importantly, it recommends an “opt-in” system, with group members having to be identified before a claim is brought. Any exceptions to this principle should be “duly justified by reasons of sound administration of justice”.
The proposals follow the Commission’s public consultation on collective redress in February 2011 (see post) and the European Parliament’s resolution in response in February 2012 (see post).
The proposals in the Recommendation overlap to a large extent with UK proposals for a new collective action for competition claims, expected to be introduced in the forthcoming Consumer Rights Bill. The UK proposals go further than the Commission Recommendation, in particular in proposing (controversially) the creation of an “opt-out” mechanism for competition claims (see post).
Other key features of the Recommendation include: Continue reading
In a recent decision, the High Court held that a contractual right of termination did not have to be exercised in good faith. An express term of the contract requiring the parties to “work together and individually in the spirit of trust, fairness and mutual co-operation” and to “act reasonably” in respect of “all matters governed by the [contract]” did not impose a duty of good faith, and no such duty could be implied into the contract: TSG Building Services PLC v South Anglia Housing Limited  EWHC 1151.
This is the latest in a series of cases in which the English courts have considered the extent to which contracting parties must act in good faith. The high water mark was Yam Seng Pte Limited v International Trade Corporation Limited  EWHC 111 (QB). In that case, Mr Justice Leggatt implied a duty of good faith into a distribution agreement and said that he saw no difficulty in implying such a duty into ordinary commercial contracts based on the presumed intention of the parties. As we noted in an earlier post, this novel approach goes against the grain of English case law and seems unlikely to herald a significant change in the approach of the courts.
The decision of Mr Justice Akenhead in the present case appears to reinforce the view that the courts will continue to give a narrow interpretation to express contractual obligations of good faith and hesitate before implying such obligations. Gregg Rowan and Michael Mendelblat consider the decision. Continue reading
In granting permission to appeal against a costs management order made under the pilot scheme in the Leeds Mercantile Court, the Court of Appeal (Moore-Bick LJ) made interesting comments regarding the court’s approach to costs management: Troy Foods Ltd v Manton  EWCA Civ 615. (Click here for our outline of the new costs management procedures introduced from 1 April 2013 as part of the Jackson reforms).
In this case the judge below appeared to have proceeded on the basis that he would approve any budget figure provided it was not so unreasonable as to render it “grossly disproportionate”. Moore-Bick LJ said that, although the court would not readily interfere with the judge’s decision in a matter of this kind, which essentially involves an exercise of judgment, it was arguable that the judge did not apply the correct principles and, as a result, approved an over-generous budget. His view that permission to appeal should be given was reinforced by the fact that it was important to ensure the correct principles for the conduct of costs budgeting were established at an early stage of the regime.
Moore-Bick LJ also commented on the defendant’s concern that, on a detailed assessment, a costs judge would treat the approval of a budget as establishing that the costs incurred were reasonable if they fell within that budget. He referred to his own view expressed in Henry v News Group Newspapers  EWCA Civ 19 (see post) that an approved budget was not to be taken as a licence to conduct litigation in an unnecessarily expensive way, and said it followed that he did not accept that costs judges should treat costs as reasonable or proportionate simply because they fell within an approved budget. He said that, in light of these arguments, the court hearing the appeal might wish to comment further on the proper approach to be taken by costs judges on detailed assessment where the court had approved the receiving party’s budget.
Unfortunately, since we understand the case has since settled, we will have to wait for another opportunity for the Court of Appeal to give guidance on these issues.
The High Court has refused an application to extend time for service of particulars of claim in circumstances where a fresh action would be time barred, with the result that the claimant will be unable to pursue its claim against the relevant defendants: Venulum Property Investments Ltd v Space Architecture Ltd and others  EWHC 1242 (TCC).
In reaching this decision, the court referred to “the stricter approach that must now be taken by the courts towards those who fail to comply with rules” following recent changes to implement the Jackson reforms. The decision therefore re-emphasises the need for careful compliance in the post-Jackson regime.
The decision is also a reminder of an important procedural point. Where a claim form is served at or near the end of its four-month period of validity (which of course is always a risky course of action) the claimant does not have a further 14 days to serve the particulars of claim: these must be served no later than the latest time for serving the claim form.