Judgment call: 27 May 2013

Equity

Walsh v (1) John Shanahan(2) James Leonard; (3) SLH Properties Ltd [2013] EWCA Civ 411. Laws LJ; Hallett LJ; RimerLJ. 25 April 2013

The award of an account of profits was a matter of discretion for the courts and an admitted breach of confidence in making unauthorised use of documents did not entitle a claimant to an account of profits rather than an award of damages.

Appeal dismissed

For the appellant Walsh

Essex Court Chambers’ Geraldine Andrews QC; Enterprise Chambers Simon Johnson; Richard Slade and Company partner Richard Slade

For the respondents(1) John Shanahan(2) James Leonard; (3) SLH Properties Ltd

36 Bedford Row’s Richard Wilson QC; 36 Bedford Row’s Grainne Mellon; Teacher Stern partner Lee Donoghue

Shipping

Standard Chartered Bank v Dorchester LNG (2) Ltd[2013] EWHC 808 (Comm). Teare J. 18 April 2013

It was a reasonable and necessary inference that when a bank took possession of and retained bills of lading, it had accepted delivery of them as the indorsee and was the “holder” of them for the purposes of the Carriage of Goods by Sea Act 1992 s.5(2)(b).

Damages assessed

For the claimant Standard Chartered Bank

20 Essex Street’s Michael Tselentis QC; 20 Essex Street’s Socrates Papadopoulos; Norton Rose associate Andrew Pearson

For the defendant Dorchester LNG

2 Temple Gardens’ Paul Downes QC; Brick Court Chambers’ Fionn Pilbrow; Ince & Co partner Stuart Shepherd

Banking & finance

National Merchant Buying Society Ltd v (1) Bellamy; (2) Stephen Mallett[2013] EWCA Civ 452. Longmore L J; Rimer LJ; Kitchin LJ. 2 May 2013

A former company director was liable under a personal guarantee given to a creditor in respect of sums due by the company. He could not escape liability under the rule in Holme v Brunskill (1878) 3 QB D 495 because the guarantee was not limited to a specific contract.

Appeal dismissed

For the appellant Stephen Mallett

One Essex Court’s Jonathan Miller; Whitehead Monckton Solicitors’ Chris Loughlin

For the respondent National Merchant Buying Society Ltd

St Philips Chambers Andrew Maguire; The Smith Partnership

Arbitration

Morris Homes (West Midlands) Ltd v (1) Antony Keay; (2) Jeffrey Keay [2013] EWHC 932 (TCC). QBD (TCC). Judge David Grant. 18 April 2013

The court outlined the criteria applicable to determining applications under the Arbitration Act 1996 s.69 for permission to appeal against an arbitration award.

Permission refused

For the claimant Morris Homes (West Midlands) Ltd

St Philips Chambers’ John Randall QC; St Philips Chambers’ Conrad Rumney; Gateley partner Peter Davies

For the defendants (1) Antony Keay; (2) Jeffrey Keay

11 Stone Buildings’ Jeremy Cousins QC; St Philips Chambers’ Andrew Charman; Moran & Co’s Patrick Moran

Damages

(1) Vestergaard Frandsen A/S (now called MVF 3 Aps); (2) Vestergaard Frandsen SA; (3) Disease Control Textiles SA v (1)Bestnet Europe Ltd; (3) 3T Europe Ltd; (4) Intection Ltd; (5) Intelligent Insect Control Ltd; (6) Torben Holm Larsen; (7) Trine Angeline Sig [2013] EWCA Civ 428. Lloyd LJ; Tomlinson LJ; Floyd LJ. 25 April 2013

The court considered the correct approach to the assessment of damages in a breach of confidence case involving a “derived product”, namely a product which did not directly result from the improper use of another’s trade secrets, but which derived from a product which did.

Appeal dismissed

For the claimants (1) Vestergaard Frandsen A/S (now called MVF 3 Aps); (2) Vestergaard Frandsen SA; (3) Disease Control Textiles SA

8 New Square’s Mark Platts-Mills QC; 8 New Square’s Tom Moody-Stuart; Field Fisher Waterhousepartner Nick Rose

For the defendants (1) Bestnet Europe Ltd; (3) 3T Europe Ltd; (4) Intection Ltd; (5) Intelligent Insect Control Ltd; (6) Torben Holm Larsen; (7) Trine Angeline Sig

Hogarth Chambers’ Alastair Wilson QC; 8 New Square’s George Hamer; McGuire Woods partner Michael Tackley

Human rights

AAA v Associated Newspapers Ltd [2013] EWCA Civ 554. Lord Dyson (MR); Tomlinson LJ; Ryder LJ. 20 May 2013

A judge had not erred in finding there was an exceptional public interest in the life of an elected politician such as to justify the publication of a newspaper article claiming that a child had been born as a result of his extramarital affair.

Appeal dismissed

For the appellant AAA (by her litigation friend BBB)

5RB’s James Price QC and 5RB’s William Bennett instructed by Collyer Bristow

For the respondent Associated Press

5RB’s Desmond Browne QC and 5RB’s Alexandra Marzec, instructed by RPC partner Keith Matheison

Featured case

Barclay Brothers' castle
Barclay Brothers’ castle on Brequou, near Sark

Constitutional law

R. on the application of (1) Sir David Barclay (2) Sir Frederick Barclay v (1) Secretary of State for Justice and Lord Chancellor; (2) The Committee for the Affairs of Jersey and Guernsey; (3) HM Privy Council [2013] EWHC 1183 (Admin). Sir John Thomas (president), Burnett J. 9 May 2013

The decision of the Committee for the Affairs of Jersey and Guernsey recommending approval of the new provisions under the Reform (Sark) (Amendment) (No.2) Law 2010 was wrong, and therefore unlawful, as the provision enabling the alteration of the Seneschal’s terms of office, including his remuneration, was not compatible with the European Convention on Human Rights (ECHR) 1950 art.6.

Application granted in part

The claimants, Sir David Barclay and Sir Frederick Barclay, applied for judicial review of an Order in Council approving the Reform (Sark) (Amendment) (No.2) Law 2010.

The 2010 law, that made new provision for the appointment of the Seneschal in Sark, was enacted following the Barclays’ successful challenge to the legality of the Seneschal’s dual role as chief justice on the island and president of the legislature on the basis that it was incompatible with the ECHR 1950 art.6(1).

The defendant secretary of state advised the second defendant committee in relation to the compatibility of the new provisions with the convention. The Barclays claimed that the advice given was wrong as the 2010 law did not comply with art.6, and as a result the decisions of the committee and the Privy Council to recommend approval of the 2010 law were unlawful.

The secretary of state argued that the English courts did not have jurisdiction, and if they did that the claim was not justiciable, or alternatively that there was no breach of the convention.

Application granted in part

Arguably, the proper court was a court of the Bailiwick of Guernsey because the claimants could pursue their claim in those courts, and the nature of the legislative process in issue related to that Bailiwick.

However, that required a distinction to be drawn that was not drawn in R. (on the application of Bancoult) v Secretary of State for Foreign and Commonwealth Affairs [2008], and a departure from the course followed in R. (on the application of Barclay) v Secretary of State for Justice [2009] which, although the result of a concession as to the effect of Bancoult, was accepted and acted upon. Therefore, it was not right to decline jurisdiction on that basis, Bancoult and Barclay considered.

The correctness of the secretary of state’s advice as to the interpretation of art.6 could be determined by reference to the considerable body of authority available. The issue was of the kind identified in R. v Secretary of State for the Home Department Ex p. Launder (No.2) [1997] and R. v DPP Ex p. Kebeline [2000] and fell within the principle in Launder which permitted the review of a decision based upon the interpretation of the convention, even at a time when it only had treaty status, where a decision was impugned on the basis that the decision maker erred in interpreting the convention. Therefore, the issue was justiciable.

The method of judicial appointment was central to establishing and maintaining an individual and institutionally independent judiciary that was also seen to be such. Clearly, the committee was established, and the latest Seneschal appointed, in circumstances compatible with art.6. The usual formal requirements were unnecessary in a small community like Sark.

It was sufficient that the committee was qualified to perform the appointment function and was independent. The requirement for the Lieutenant Governor’s approval of the appointment was not a formality. He was under an express obligation which included a requirement to satisfy himself that the committee concerned was properly qualified and independent, and that the proposed Seneschal had the experience and capacity to satisfy the art.6 requirements when exercising the jurisdiction of the judge of Sark. That provided the necessary safeguard to ensure a proper appointment compliant with art.6.

Clearly, the Seneschal could only be removed in a way compliant with art.6 because it had to be by direction of the Lieutenant Governor, who was independent of the relevant Legislative and Executive powers. The relevant procedure had to provide proper safeguards, including a process culminating in a reasoned decision for removal. The failure to specify such a process in the legislation could not give rise to any objectively based fears of a risk of the Seneschal being influenced by any improper attempt to remove him.

Provided the process for the re-appointment of the Seneschal was properly compliant with art.6, there was no objection to the legislative decision to review the appointment at the specified ages. However, the re-appointment provision was significantly different to that for the original appointment because the Lieutenant Governor had no role at all. Although of concern, it did not mean that it violated the principles of independence and impartiality required by art.6.

An essential component of judicial independence was legal protection against arbitrary reduction in a judge’s remuneration. The Seneschal had to be perceived to be under no influence from the majority in the community through the use by the Chief Pleas of its unfettered power to reduce his remuneration. The fact that the Chief Pleas acquired that power by amending the legislation, thereby removing the Lieutenant Governor’s role, was highly significant to the perception of the risk of an arbitrary exercise of power.

Therefore the provision enabling the alteration of the Seneschal’s terms of office, including his remuneration, constituted a violation of art.6.

A declaration was granted that the committee’s decision recommending approval of the provisions of the 2010 Law was unlawful because in respect of the Seneschal’s remuneration, the Law was incompatible with art.6. The incompatibility could be cured by an appropriate amendment to the Law to restore to the Lieutenant Governor an effective power over remuneration.

Commentary: Charles Bourne

This case, relating to legislation in the unique jurisdiction of Sark, contains a ruling of significance for judicial reviews involving questions of international law.

The story began with legislation amending Sark’s constitutional arrangements following reform of its feudal structure. Legislation in Sark must be approved by the Queen in Council following a recommendation by a committee with advice from the secretary of state. In this case it was claimed wrong advice was given, leading to a recommendation for legislation incompatible with ECHR art.6. The ECHR applied to Sark as an international treaty, but the Human Rights Act 1998 did not.

The court ruled that a provision was contrary to art.6 (by permitting the executive to reduce a judicial salary; a finding not without interest in the context of changes to judicial pensions in the UK). It also refused to decline jurisdiction by reference to Bancoult, notwithstanding that a court of the Bailiwick of Guernsey was arguably the more appropriate forum.

Potentially more far-reaching was the Court’s acceptance that it could review the compatibility with the ECHR of the Committee’s decision based on advice about convention rights, applying the principle in Ex p. Launder (No.2). That principle, that an error in interpretation of unincorporated treaty rights can found a rationality and legality challenge, has been significantly limited since. Here, the court decided to leave it “open for consideration whether [it] ought to extend to the present claim”. Launder lives, but for how long?

Charles Bourne, barrister, 11KBW