Judgment Call

Latvian Shipping Co v Russian People’s Insurance Co (ROSNO). [2012] EWHC 1412 (Comm).
Field J. 1 June 2012

The court had jurisdiction under CPR r.3.1(7) or its inherent jurisdiction to set aside an order granting leave to appeal against an arbitration award on points of law under the Arbitration Act 1996 s.69.
Judgment accordingly
For the claimant Latvian Shipping
Stone Chambers’ Philip Riches; Clyde & Co senior master mariner Barry Turner
For the defendant Russian People’s Insurance Co
Quadrant Chambers’ Thomas Macey-Dare; Stephenson Harwood partner Andrew Rigden Green

My Secrets Ltd v Revenue and Customs Commissioners. Unreported. Briggs J.

24 May 2012
Where a tribunal was determining whether an exporter ought to have known that his transactions were connected with missing trader fraud it could consider whether the exporter had asked himself any of the questions identified by the Court of Appeal in Mobilx Ltd (In Administration) v Revenue and Customs Commissioners.
Appeal dismissed
For the appellant My Secrets
Temple Tax Chambers’ Timothy Brown; Tax and legal services managing director Richard Yewdall
For the respondent commissioners
9-12 Bell Yard’s Mark Bryant-Heron and St John’s Chambers’ George Rowell instructed directly by the general counsel and solicitor to HM Revenue & Customs

Bento v Chief constable of Bedfordshire. [2012] EWHC 1525 (QB). Bean J. 1 June 2012

Tim Smith
Tim Smith

A chief constable was unable to rely on the defences of justification and qualified privilege in a defamation claim brought following a press release which indicated that a CPS decision not to pursue a murder prosecution against the claimant was wrong because he was probably guilty. The chief constable was unable to prove the claimant had killed the victim and the high public interest in maintaining confidence in the system would not be served by encouraging the police to issue such statements.
Judgment for claimant
For the claimant Bento
Matrix Chambers’ Hugh Tomlinson QC

QC; Matrix Chambers’ Sara Mansoori; Hughmans partner Matthew Jenkins
For the defendant Chief constable of Bedfordshire
One Brick Court’s Richard Rampton QC; One Brick Court’s Catrin Evans; One Brick Court’s Hannah Ready; Berrymans Lace Mawer partner Tim Smith

Legal profession
Law Society (acting through its independent regulatory arm, Solicitors Regulation Authority) v (1) Gerard Joseph Waddingham; (2) David Thomas Smith; (3) Neil David Parsonage [2012] EWHC 1519 (Admin). Maddison J; Richards LJ. 1 June 2012

Where there were allegations solicitors had acted in conflict of interest in making loans from a client’s trust fund, including an allegation of dishonesty, it was for the SRA to prove this through the application of the two-step test laid down in Twinsectra Ltd v Yardley.
Appeal allowed
For the appellant
Law Society
Fountain Court’s Timothy Dutton QC; RJW solicitor Rob Drury
For the respondents (2) David Thomas Smith; (3) Neil David Parsonage
Byrom Street Chambers’ Simon Myerson QC; Lindsays Solicitors partner Andrew Lindsay

Civil procedure
(1) Chief constable of Hampshire; (2) South Central Ambulance Service NHS Trust v Bullale (suing as the personal representative of Ali Farah Bullaleh) [2012] EWHC 1549 (QB). Sir Charles Gray. 12 June 2012

Mark Mullins
Mark Mullins

A judge had erred on an application for summary judgment on a race discrimination claim by conflating two questions – whether the treatment had proved less favourable and whether the reason for that was racial. Less favourable treatment had to be established before any consideration of the reason for it arose.
Appeal allowed
For the first appellant/ defendant Chief constable of Hampshire
Old Square Chambers’ Giles Powell, instructed directly by Office of the Force Solicitor
For the second appellant/ defendant
South Central Ambulance Service NHS Trust
Outer Temple Chambers’ Mark Mullins; DAC Beachcroft solicitor Samantha Rose
For the respondent/claimant Bullale
Garden Court Chambers’ Rajeev Thacker; Deighton Pierce Glynn partner Jane Deighton

BP Oil International Ltd v Target shipping Ltd [2012] EWHC 1590 (Comm). Also sourced as a transcript. QBD (Comm). Andrew Smith J. 14 June 2012

Parties to a charter on the BPVoy 4 form had not agreed to the amount of overage freight payable in respect of a transatlantic voyage and the shipowner was entitled to reasonable overage freight.
Judgment accordingly
For the claimant BP Oil
Quadrant Chambers’ John Russell; Quadrant Chambers’ Paul Toms; Clyde & Co partner David Bennet
For the defendant Target Shipping
Essex Court Chambers’ Steven Berry QC; 20 Essex Street’s Thomas Raphael; Lax & Co partner Robert Pollock-Hill

Helmsley Acceptances Ltd v (1) Ali; (2) DB UK Bank Ltd [2012] EWHC 1591 (Ch).Ch D. Roger Wyand QC. 14 June 2012

Clauses in a settlement agreement that provided for the defendant to make a payment to the claimant and for the claimant to withdraw its claim had to be construed as being mutually dependent. That accorded with business common sense.
Preliminary issue determined
For the claimant Helmsley
Landmark Chambers’ Timothy Morshead QC; Muckle partner Susan Howe
The first defendant appeared in person

The second defendant did not appear and was not represented

Company law
Itau BBA International Ltd, Re. [2012] EWHC 1783 (Ch). Henderson J. 28 June 2012

The definition of ‘existing transferee company’ in the Companies (Cross-Border Mergers) Regulations 2007 reg.3(1) was wrong. It did not mean to exclude transferee companies formed in connection with a cross-border merger, only those formed in connection with a merger. The words “by formation of a new company” were to be added at the end of the definition of “existing transferee company”.
Declaration granted
For the claimant Itau BBA
Erskine Chambers’ Stephen Horan; White & Case partner Ashley Ballard

Case of the Week

Civil procedure
Summers v Fairclough Homes Ltd [2012] UKSC 26. Lord Hope (deputy president); Lord Kerr JSC; Lord Clarke JSC; Lord Dyson JSC; Lord Reed JSC. 27 June 2012

The court had power under the civil procedure rules (CPR) to strike out a statement of case at any stage of the proceedings, even when it had already been determined that the claimant was entitled to damages in an ascertained sum. However, that power was to be exercised only where it was just and proportionate to do so, and that was likely to be only in exceptional circumstances.
Appeal dismissed
Fairclough Homes appealed against a Court of Appeal (CoA) ruling upholding a refusal to strike out a personal injury claim brought by one time Fairclough employee Summers.
The High Court ruled the respondent to be liable for the injury, leaving damages to be assessed. The claim was valued at £250,000, but the respondent uncovered surveillance that showed Summers had exaggerated the extent of his injuries.
At the damages trial the judge ruled that while Summers suffered serious injury he had exaggerated his claim. The judge refused to strike out the claim and awarded reduced damages of £88,716.
Fairclough appealed the ruling and the CoA rejected it ruling that there was no power to strike out the claim in its entirety.
Appeal dismissed
The court did have jurisdiction to strike out a statement of case for abuse of process, or under its inherent jurisdiction, even after a trial in which the court had made a proper assessment of liability and quantum.
The fraudulent exaggeration of a claim was an abuse of process, and the language of the CPR supported the existence of a jurisdiction to strike out a claim for abuse of process even where to do so would defeat a substantive claim.
Under the CPR the court had a wide discretion as to how its powers should be exercised and the position was the same under its inherent jurisdiction. However, the power to strike out after a trial was to be exercised only in exceptional circumstances.
Where a claimant had obtained judgment on liability, with damages to be assessed, that amounted to a possession for the purposes of the European Convention on Human Rights Protocol 1 art.1. Depriving him of that possession by striking out his claim was only permissible if it was in the public interest and was a proportionate response.
While it was in the public interest that there should be a power to strike out a statement of case for abuse of process, the courts had to scrupulously examine the circumstances of each case to ensure that striking out was a proportionate means of achieving the aim of controlling the process of the court and deciding cases justly.
Striking out was always a last resort, even more so where to do so would deprive the claimant of a substantive right to which he had been held to be entitled.
While all reasonable steps had to be taken to deter fraudulent claims, in the vast majority of cases the correct approach was to assess liability and quantum and give judgment in the ordinary way. A party who fraudulently exaggerated a claim would have difficulty persuading a judge that any of his evidence should be accepted, and he could expect to be penalised in costs.
A person who fraudulently exaggerated a claim could expect to face criminal charges or committal to prison for contempt of court.
While there had been a serious abuse of process, Summer had nonetheless suffered significant injury as a result of Fairclough’s breach of duty and, on the judge’s findings, was entitled to damages of £88,716.

For the appellant Fairclough Homes

William Norris QC, 39 Essex Street, James Todd, 39 Essex Street

Sadie Crapper, 39 Essex Street

David Spencer, Berrymans Lace Mawer partner

For the respondent Summers

Craig Sephton QC, Deans Court Chambers’
Hugh Davies, Deans Court Chambers
Nicola Winslet, SAS Daniels partner


David Spencer

David Spencer, partner, Berrymans Lace Mawer

While the dismissal of the appeal is disappointing there are positives for defendants. By establishing the power to strike out an entire claim – even the legitimate part and even after a trial – no longer do claimants have a ‘free roll of the dice.’
While the Supreme Court has indicated that all reasonable steps should be taken to deter fraudulent claims they underestimate the efficacy of sanctions to date. Costs penalties are hopeless against men of straw whose legal expenses providers have withdrawn indemnity because of fraud. That it can be withdrawn while the defendant’s insurer maintains a liability also illustrates the anomaly between first and third-party fraud that could have been resolved here.
Limiting or denying interest on damages that may now be struck out could have limited impact. Criminal prosecutions depend on the desire of the Police and the Crown Prosecution Service. There has been much to feast on but no appetite to date.
Finally, contempt – historically the last hope of an aggrieved insurer, but the cost involved meant any victory was pyrrhic. Should public law proceedings continue to be run at the cost of the insurer or can we expect input from the attorney general?
This judgment brings significant and welcome clarification, but falls short of defining practical guidance. It is anticipated that lower courts will soon be required to apply their judicial discretion to interlocutory applications and set benchmarks for when it is just and proportionate to strike out claims and, post-trial, those exaggerated claims that inevitably still exist.