It takes two

It’s no accident that the Chancery Division and the Commercial Court are separate entities – and that’s how they should stay, argues Geoffrey Zelin.

It takes two It is beyond doubt that the Chancery Division and the Commercial Court each offer judges of the highest quality. Moreover, there is a considerable overlap in their work. Many contractual disputes could be heard in either jurisdiction, so what could be better than a merger to provide a single court of all the talents?

While areas of overlap exist, it is the ­differences that distinguish these two courts, not just from other divisions and courts that operate in our justice system, but from each other. As well as commercial contracts, the Chancery Division deals with cases involving real property and landlord and tenant; company law; corporate and personal insolvency; patents, copyright and other intellectual property issues; competition law; wills and trusts; and tax.

Much of the division’s business involves professional negligence claims against solicitors, surveyors and accountants, where the underlying transaction involves one or more of the ‘chancery’ areas. Even contract cases tend to revolve around the core chancery areas. Share sale agreements and contracts for the sale of land are a staple of the ­division’s work.

None of this is an accident because these core areas all have their roots in property law as modified by principles of equity, and all involve the application of equitable principles, often leading to the grant of equitable remedies. Company law is a prime example, combining rules of property ownership with the principles of trust law. The derivative action provided for in the Companies Act 2006 is largely a codification of a judge-made ­procedure that developed out of the Beddoe jurisdiction in trust disputes.

While mentioning trusts conjures up Dickensian images, these structures and the principles that underpin them are important in today’s commercial world for pension funds and investment products.

The Commercial Court also has its ­specialist areas. Admiralty disputes and the operation of documents that are the lifeblood of commerce have their own peculiarities that will not be familiar to practitioners or judges who do not have practical experience of dealing with such matters.

Judges are – or should be – appointed to sit in the courts where their experience can be best used. Maintaining the separation of the divisions ensures this. This is in the interests of justice. It means that cases can be dealt with more efficiently.

At the case management stage the judge is more likely to know what the preparation and presentation of the case is likely to involve. At the substantive hearing, time is not spent dealing with the basics of the ­relevant law, bad points are more likely to be seen for what they are, and the overall risk of a wrong decision is reduced. The integrity and reputation of the system are also ­maintained because litigants know that their cases are being dealt with by specialist judges who understand the issues.

The current system has also encouraged the growth of specialist sections of the bar who practice predominantly in either the Commercial Court or the Chancery ­Division, gaining detailed knowledge and expertise in the specialist non-overlap areas of the two jurisdictions.

This too is conducive to the efficient ­disposal of cases. Clients can be sure of obtaining specialist advice and representation; case management is more effective; the advocates and the judge are likely to understand each other’s thinking; bad points are less likely to be taken (or argued at great length); and the risk of bad decisions is accordingly reduced.

Specialist practitioners provide a pool from which judges can be recruited. Having separate Commercial and Chancery courts allows litigants and their advisers to choose the forum most appropriate to their case.

This choice would be lost if a single business court were established and the task of allocating each case to a particular list were left to a judge – which many would regard as an inappropriate use of judicial resources – or, worst of all, a member of the court’s administrative staff.

The Chancery Division has developed a range of procedures suited to each of its areas of work and there are specialist masters, ­registrars and district judges ensuring appropriate expertise at all levels of the judiciary.

Core judicial skills are applied across the whole system. All judges have to assimilate and evaluate evidence, and they all have to weigh competing factors and interests. Civil judges are often called upon to consider ­concepts such as dishonesty, which are a staple of the criminal courts. Family ­Division judges exercise a wide range of ­discretionary powers, as do Commercial and Chancery judges.

Yet no one has suggested that specialist criminal judges should hear Chancery cases – indeed, there is authority to the effect that they should not: UCB v Hedworth (2003) – or that family judges should hear ­commercial cases. Merging the Chancery Division and Commercial Court is neither desirable nor necessary.

Geoffrey Zelin is a barrister at Enterprise Chambers

For a contrasting view from Lawrence Cohen QC, click here.