what's in the news

Reporting the decision of the European Court of Human Rights in Strasbourg today, as they rejected Max Mosley’s attempt to impose a “pre-notification” obligation on journalists who are planning to run a story infringing a person’s privacy, most of the press are describing it as a victory for free speech.

It goes without saying, of course, that free speech is important. The ability to report on any subject without fear of censorship or stifling is something which is rightly regarded as a mark of a free, open and progressive society. The fact is, though, that free speech is not, and has never been, an absolute right. Untrue statements made in a manner calculated to harm a person’s reputation are for example subject to the laws of defamation. Similarly, laws exist to restrict the making of statements likely to inflame religious hatred, or incite violence.

Under the Human Rights legislation applied by the Strasbourg Court, and incorporated into domestic law by the 1998 Human Rights Act, free speech is simply one of a range of rights to be protected, sitting alongside other equally important rights such as the right to privacy (or more properly, the right to respect for one’s private and family life, home and correspondence). Both the right to freedom of expression and the right to privacy are expressly permitted to be curtailed in a variety of circumstances ranging from matters of national security to the consideration of the rights and reputations of others.

The balancing exercise between these competing rights is something that the Courts undertake every time they have to consider a case involving privacy issues and the press. It is the exercise that the Courts undertook in determining that the News of the World’s story about Max Mosley represented an unwarranted intrusion into matters of which he had a reasonable expectation of privacy, and served no wider public interest. Mr Mosley was awarded damages and costs, but he has made the very valid point that nothing can restore the private life he had before the story broke. It is difficult to see that a Court undertaking that balancing exercise prior to publication would have come to a different conclusion, but of course the difference in timing would have made all the difference in the world to Mr Mosley and his family.

In this sense, privacy is a different right to the reputational rights protected by libel law. Publication of an untrue statement can be just as harmful to a reputation, but the subsequent publication of an apology or correction will in the majority of cases serve to extinguish, or at least greatly reduce, the harm done by the original publication. Where privacy is infringed, the essential facts on which the story is based are probably true, and once in the public domain they cannot be expunged. Is it really so unreasonable to suggest that in those specific circumstances, the Courts ought to have an opportunity to weigh the merits of the story against the invasion of privacy that is proposed, before the genie is irretrievably let out of the bottle?

Will Richmond-Coggan is a Solicitor-Advocate in the Dispute Resolution department, whose specialisms include defamation and media disputes, including privacy issues.  Will can be contacted on 0118 957 0369 or email wrcoggan@pitmans.com

In this country we are fortunate to be served by a judiciary which is both robustly independent and academically able. Most judges run their courts well and deal with matters before them expeditiously.

Given the volume and complexity of the issues heard by our courts, it is inevitable that it can take several weeks after a trial or hearing for judgment to be given. But when does proper time for consideration and drafting of a judgment turn into unacceptable delay and when might that delay interfere with the quality of justice?

This question was considered lately by the Court of Appeal in Bond v. Dunster Properties Ltd & Others. In this case, a business dispute between a father and son, the judge had taken 22 months from the trial to give his judgment. The father lost the case and appealed to the Court of Appeal on the basis that the extraordinary delay on the part of the judge had led to errors. The Court of Appeal held that findings of fact were not automatically to be set aside because of delay – it is necessary to ask whether the judge was plainly wrong – but if it can be shown that the judge’s recollection has been adversely affected by the delay, a retrial can be ordered. (In this particular case, the appeal was unsuccessful.)

It is generally acknowledged that delays, particularly when unexplained and where there is no apology, can be a denial of justice, leaving the parties in uncertainty and undermining confidence in the court’s judgment. Further, Article 6 of the Human Rights Act requires that judgments be delivered within a reasonable time. The Court of Appeal explained that what is reasonable will depend on the complexity of the legal issues, the volume and nature of evidence and other factors including the involvement of children, or litigants with terminal illnesses or other grounds of urgency. It recommended that delays beyond a reasonable period should be explained by letter or e mail to the litigants.

The 1998 case of Goose v Wilson Sandiford had already made clear that delays of the Bond v Dunster kind should not happen. In the circumstances, the Master of the Rolls now intends to look into whether procedures need to be introduced to prevent this type of problem arising again.

Sue O’Brien
sobrien@pitmans.com
+44 (0) 118 957 0513

Improved Rights for Unsecured Creditors of Insolvent Companies

Under the Third Parties (Rights Against Insurers) Act (1930), there have long existed provisions which, provided certain hurdles can be overcome, enable parties who have a claim against an insolvent insured party to make a recovery direct from the insurance policy, rather than simply ranking with other unsecured creditors in the insolvency.  The hurdles under the 1930 Act in practice deterred claimants from making claims because it was not always easy or possible to get information about the extent of insurance (and therefore decide whether any costs outlay was likely to be worthwhile).  In addition claimants faced the expense of having to restore a defunct company to the Register in order for it to bring or defend legal proceedings. 

The new Act aims to bring the 1930 Act up to date and improve the rights of third parties whilst reducing litigation, expense and delay.  Under section 1 a third party will be able to bring proceedings directly against an insurer to establish both the liability of the insured party and the potential liability of the insurer.  If a third party has reason to believe that an insolvent insured has incurred a liability to him, he may request information from anyone who might have knowledge of the insurance as to the identity of the insurer, the terms of the insurance, any limits of liability and whether there are any fixed charges which would apply to any sums paid out.  This information has to be provided within 28 days.  In the past it has been difficult to obtain such information but now people such as brokers, former employees and others authorised to hold policy information can be approached and are bound to answer.

The rights which can be enforced by a third party are no greater than those which the insured itself would have had.  Accordingly, the insurers can defend themselves under the insurance policy if they believe they are entitled to do so.  So whilst the claimant will be in no better position than the insured would have been, he will certainly be stealing a march on other unsecured creditors. 

The Act was expected to come into force in April 2011, but at the time of writing a date is still awaited.

For further information please visit Pitmans’ Dispute Resolution website or contact:

Sue O’Brien
sobrien@pitmans.com
+44 (0) 118 957 0513

What impact will the Bribery Act 2010 have on your business? What are the penalties connected with the Equality Act 2011? How do you achieve compliance and best practice for your property?

Are you up to date with current legislation? Looking for a swift update on key areas? Read the rest of this entry »

The Court of Appeal, in its February 2011 judgment in the case of Rolf –v- De Guerin has taken the opportunity to reiterate that the conduct of parties during litigation, and in particular a refusal to mediate or attempt other forms of alternative dispute resolution, will have a significant impact on the costs award at the end of a case.

In this dispute which concerned the building of a garage and loft, the householder obtained a judgment for a mere £2,500 against a claim which, at its highest, was put at £92,515.  Although the householder, a Mrs Rolf, had thus succeeded in her claim, she in fact recovered a very small proportion of the amount claimed and had failed on a number of her main allegations. Based on these and other factors, in this case costs did not “follow the event” as is common – the trial judge awarded costs to the unsuccessful defendant. 

Mrs Rolf appealed to the Court of Appeal. In her favour, she was able to show that she had expressed a genuine willingness to settle and had been prepared to attempt mediation at various stages. The building contractor had rebuffed all these overtures until 6 days before trial which, in the circumstances of this case, was found by the Court of Appeal as having been too late. 

The Court of Appeal held that the builder’s reasons for refusing mediation did not hold water.  His reasons were that by mediating he would have had to accept liability, he felt a key witness for Mrs Rolf had to be seen by a judge at trial and in any event, he wanted his day in Court.

The Court of Appeal held that the spurned offers to enter into settlement negotiations or mediation were unreasonable and found that they “ought to bear materially on the outcome of the Court’s discretion”.  In substitution for the order made by the judge at first instance, the Court of Appeal made “no order as to costs”. 

For further information relating to Pitmans Dispute Resolution team, please contact:

Sue O’Brien
Partner, Head of Dispute Resolution
+44 (0) 118 957 0513
sobrien@pitmans.com

In 2000 the EU adopted a Directive regarding interest on late payments in commercial transactions. This directive was implemented in the UK through The Late Payment of Commercial Debts Regulations 2002.

In 2009 a report by the European Commission found that there was just under €2trn of late payments in the European economy, of which over a half was owed to small or medium businesses. The Commission proposed replacing/amending the Late Payments Directive to try to deal with the continuing problem of late payments within the EU.

In October 2010 the European Parliament approved an amended Directive and on 24 January 2011 the amended Directive was formally adopted by the European Parliament.

The new Directive will come into force twenty days after its publication in the Official Journal which as at 1 February 2011 has not yet been published.

The key amendments to the directive are summarised below:-

1) For business-to business payments, the general deadline is 30 days unless otherwise stated in the contract. It is possible, if both parties agree to extend payment terms up to 60 days. The period may be extended beyond 60 days only if “expressly agreed” by the parties in the contract and provided that it is not “grossly unfair to the creditor”.

2) The standard deadline for public to business payments is 30 days. Payment can be extended up to 60 days only if it is “expressly agreed” and justified in light of the nature or feature of the contract or if the public entity is providing healthcare.

3) If purchasers default on the payment terms then the supplier will be entitled to interest at the statutory rate of 8% above the European Central Bank interest rate.

4) The supplier is also entitled to compensation costs from defaulting purchasers. Suppliers are entitled to charge €40 in relation to expenses incurred as a result of the late payment and may also be able to claim any reasonable recovery costs incurred.

5) Where a contract provides for a verification or acceptance period, the Directive provides that interest does not run until verification or acceptance has taken place.

6) Where payment is made by instalments, the late payment of an instalment will attract interest and compensation under the rules of the Directive but only in respect of that instalment and not the whole contract price.

7) Any clause in a contract which seeks to exclude interest for late payment or compensation is held to be grossly unfair and the Directive requires Member States to provide that such a clause is either unenforceable or gives a rise to a claim to damages.

Member States will be required to implement the Directive within 2 years of its coming into force although the European Parliament is encouraging Member States to begin adopting the Directive into national law from the beginning of this year.

It is hoped that this recast Directive will improve timely payments and thereby ease the cash flow burden on small and medium businesses. What remains important despite this Directive are the terms of the contract including any terms and conditions with regards to payment terms, interest rates applicable on late payments and the jurisdiction to apply in the event of a dispute are in place.

Please visit Pitmans Insolvency & Restructuring or the Dispute Resolution webpages for further information or contact our team direct.

Rachel Brown
Legal Executive – Dispute Resolution
+44 (0)118 957 0502
rbrown@pitmans.com

Suzanne Brooker
Partner – Dispute Resolution
+44 (0)118 957 0516
sbrooker@pitmans.com

Yes, really.  In Nicholas Prestige Homes v Neal (2010) the Court of Appeal has confirmed that a contract concluded by email was binding. How did such a seemingly obvious point come to be taken and what can we learn from this case? There appear to be three key messages.

First, the Court upheld the rule that the claimant firm of estate agents were not entitled to a commission on a sale of a property which had been arranged by another firm of agents. The claimant firm had not introduced the purchaser to the purchase. However, because they were sole agents at the time they were entitled to damages equivalent to their commission because they lost the “certain” chance of earning it. 

Secondly, the seller represented herself in the County Court and the Court of Appeal. Whilst they bent over backwards to give her the benefit of the doubt, she could not avoid the almost inevitable conclusion that she was bound by the terms of the contract she had made.

The third key message, therefore, is that it is easy to bind yourself into an agreement by email. This is how it happened. After a site visit the claimant estate agents sent Mrs Neal an email which said they would be joint agents until 31 December 2006 and that from 1 January 2007 they would have sole selling rights. Two sets of terms for the different agency arrangements were attached. The claimant chased up with a phone call and Mrs Neal replied by email saying: “That’s fine, look forward to some viewings.” The Court of Appeal highlighted two issues that were crucial to the outcome: 

(i) whether it mattered that Mrs Neal had not fully read the email or the attachments (it did not) and;

(ii) that her acceptance was a reply to the original email such that there was no possibility of arguing that her message “that’s fine” related to anything different.

Conclusion:

The case would have been remarkable had the Court not found that a contract existed. It does highlight the ease with which contracts can be formed by email and the danger of not reading things properly. It was no defence to say that the emails or attachments had not been read or did not reflect what was intended.  Once accepted, the terms were binding. Oh, and we would say this, had Mrs Neal taken advice and not acted in person she might well have avoided two court hearings, adverse costs orders and have had a good chance of reaching a more favourable negotiated settlement.

Tim Clark
Partner
+44 (0)118 957 0264
tclark@pitmans.com
http://www.pitmans.com/dispute-resolution/

PFI firms will not have failed to notice the publicity last weekend given to remarks by Francis Maude, the Cabinet Office Minister, who stated that many PFI deals were “ghastly” and imposed an unfair “penalty” on schools, hospitals and other public services. 

The Telegraph reported that the Cabinet Office and Treasury Officials were examining PFI contracts looking for ways to claw back money for tax payers. With this political impetus and the financial pressure to which they are now subject, it would not be surprising if public bodies started to mount challenges to these contracts. Operational PFI contracts will be scrutinised against current best practice and efforts may be made to upgrade and update them in ways which go beyond contractually-permitted variations, or to reduce the public sector liability or the private sector profit.

In our experience, even if a case in law may be questionable, where there is sufficient political and financial pressure, there is a risk that contracting parties will “have a go”, creating problems for their PFI partners who have invested heavily in order to reap their rewards over years to come. 

If faced with any such challenge, PFI firms would no doubt want the robust support of an experienced legal team. Issues such as limitation, the enforceability of terms, possibly of the contracts themselves, as well as performance issues and termination rights may need to be examined. If claims arise the possibility of third party liability (for example liability of professionals who advise on the contracts) may need to be examined. A further complication may be exposure under refinancing or transfer deals relating to the original contracts.

For expert advice on all aspects of contractual, finance, construction and public sector claims, contact the team at Pitmans – experts in fighting your corner.

Sue O’Brien
Partner - Head of Dispute Resolution
+44 (0)118 957 0513
sobrien@pitmans.com

For more information on national and international Dispute Resolution, including arbitration, please visit the Pitmans Dispute Resolution website or contact the team direct.

Sue O’Brien
sobrien@pitmans.com
+44 (0) 118 957 0513

It is common in commercial contracts, including property agreements, to find “entire agreement” clauses which contain wording acknowledging that the parties have not relied on any representations when entering that contract.

The effectiveness of such provisions has often been challenged, with considerable success, in cases where the acknowledgment did not in fact reflect the underlying factual position. The courts’ approach was that these provisions could give rise to an evidential estoppel, which could nonetheless be challenged by showing that, contrary to the clause, representations had been made and relied on.

In the last three or four years, such challenges have been made more difficult as the courts are increasingly willing to find a “contractual estoppel”. This recognises that the parties may choose to agree that a particular state of affairs should form the basis upon which they contract, even if it is not true. Two cases this year have confirmed this trend.

In Titan Steel Wheels Ltd v The Royal Bank of Scotland Plc an investor claimed that it had been provided with negligent advice on currency transactions. RBS’ position was that the investor had made a number of statements acknowledging that it had not relied on the bank, and the bank had made it clear that it was not providing any advice. The court held that  the clauses defined the terms on which the parties had contracted, i.e. RBS was not giving advice. Further, it did not matter whether RBS had given any suggestions or advice because the parties had agreed as a matter of contract that in the event RBS gave any advice, it was not to be treated as accepting any responsibility for it. The investor’s claim failed.

In FoodCo UK LLP v Henry Boot Developments Limited, tenants of a motorway service station claimed they had been induced to enter agreements for lease by misrepresentation on the part of the landlord, Henry Boot Developments. However, each lease contained a clause whereby the tenant acknowledged that it was not entering into the lease in reliance on any such representation. Although in this case it was argued that a distinction should be drawn between clauses which used contractual language (such as “It is agreed that there have been no representations”) as opposed to a simple acknowledgment that there had been no representation, the court did not make any such distinction and the clause in the lease was held to give rise to a contractual estoppel. The clause was effective to exclude liability for innocent and negligent misrepresentation (although would not have excluded fraudulent misrepresentation).

Comment:

The upshot of these and other similar cases, is that the courts have made it harder (though not in every circumstance impossible) to challenge clauses of this type.

For advice on the interpretation and enforceability of contracts, please visit the Pitmans Dispute Resolution website or contact our team direct.

Sue O’Brien
sobrien@pitmans.com
+44 (0) 118 957 0513