Our quick updates include: the Shorter Trials Scheme, limitation periods for breach of exclusive jurisdiction clauses, balancing rights of judgment creditors and debtors, and more.


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"Dispute resolution on a commercial timescale": The Shorter Trials scheme is here to stay

Following the successful roll out of a similar scheme in the Intellectual Property Enterprise Court, the Shorter Trial Scheme ("STS") is being made available for all business cases in the High Court. The aim is to achieve shorter and earlier trials.  A Flexible Trial Scheme was also piloted. Both schemes expire on 30 September 2018, at which point they will continue on a permanent basis. 

Is STS suitable for my case? 

STS is aimed at straightforward cases with a maximum four day trial length in all courts in the Rolls Building (the Commercial Court and Admiralty Court; London Circuit Commercial Court; Technology and Construction Court and Patents Court; and business cases in the Chancery Division).  It is unsuitable for fraud cases, multi-issue or multi-party cases or those which require extensive expert or witness evidence, or disclosure.  

First Abu Dhabi Bank [1] is an example of a case which was "ideally suited" to STS.   The case concerned a single issue of interpretation, enabling proceedings with "very limited disclosure" and no witness statements or oral evidence.  Addleshaw Goddard LLP acted for the defendant. 

How does STS streamline proceedings? 

STS streamlines each stage of proceedings.  STS limits the length of the particulars of claim and defence and counterclaim.   The particulars of claim should be accompanied by a bundle of core documents.  Courts will apply strict case management of the trial, including strict control of cross examination.  Courts will summarily assess costs.  As Birss J stated in Family Mosaic, the intention is for cases under the scheme to have "a trial date fixed for not more than eight months after the CMC and with judgment six weeks thereafter".   A judgment is to be provided within a year of proceedings being issued.

Practical tips for starting or responding to STS claim  
  • Starting your claim: A letter of claim should be succinct but contain sufficient details to allow the defendant to understand the allegations.  It should notify the defendant of the intention to adopt the STS procedure.  The claim form must identify STS in the top right hand corner. The particulars of claim should be no longer than 20 pages long. 
  • Case management: Parties are encouraged to limit disclosure and a disclosure report is not required.  Witness statements should not be longer than 25 pages each and oral expert evidence will be limited to issues identified at the CMC or agreed between the parties. 
  • Court guidance: Look to court specific guidance for any additional provisions e.g. Chancery Guide. 

The permanent schemes will be introduced by a new Practice Direction based on CPR PD 51N which introduced the pilot schemes. 

Please contact Helen Musi for more information.


[1] First Abu Dhabi Bank PJSC (formerly National Bank of Abu Dhabi PJSC) v BP Oil International Ltd [2018] EWCA Civ 14

Exclusive jurisdiction clauses – new limitation period accrues with each step in foreign proceedings

The High Court has recently held that where an exclusive jurisdiction clause conferred a negative obligation, not to issue proceedings except in England & Wales, each step taken pursuing an action issued abroad would be an independent breach of that clause. The limitation period in respect of an action for breach of the clause had therefore not expired.

Background

AMT Futures Limited (AMT), the Claimant, provided services to customers as a non-advisory, 'execution only', derivatives broker (Services). The Services were provided on AMT's standard terms of business (AMT Standard Terms). The AMT Standard Terms contained a clause conferring exclusive jurisdiction on the courts of England and Wales (Exclusive Jurisdiction Clause).

On 27 May 2008, Karim Boural and others (the Defendants) brought proceedings against AMT in Germany on the basis that AMT had provided the Services to them in a manner which breached AMT's duty to the defendant in delict (German Proceedings). The German Proceedings are ongoing. 

On 11 June 2017 AMT issued proceedings against the Defendants in the English Courts on the basis that the German Proceedings constituted a continuing breach of the Exclusive Jurisdiction Clause (English Proceedings). A defence was served by three of the five Defendants (Applicants), asserting that the claims brought under the English Proceedings were statute barred, as the English Proceedings arose more than six years after the German Proceedings were brought. As a result, the Applicants made an application for strike out (Summary Judgment Application). 

Decision

The High Court (HC) held that the Applicants' express agreement to submit to the exclusive jurisdiction of the courts of England and Wales constituted a negative obligation not to:

  • pursue any claims within the scope of that submission within any other forum; nor to 
  • continue any such proceedings, and instead to bring them to an end.  

The Court concluded that the words actually used in the jurisdiction clause should be analysed when considering the scope of an exclusive jurisdiction clause. In this case, it was held that the word "exclusive" would have been a clear indication to a reasonable person, having all the relevant and admissible background knowledge, that the proceedings falling within the scope of the Exclusive Jurisdiction Clause should only take place in the courts of England and Wales. 

Each step taken by the Applicants in pursuing the German Proceedings was an independent breach of the Exclusive Jurisdiction Clause. The English Proceedings were not statute barred, despite having been started more than 9 years after the German Proceedings. The Defendants' Summary Judgment Application was dismissed. 

Comment 

The decision highlights the importance of properly understanding and complying with exclusive jurisdiction provisions: claims should be brought in the agreed forum and failure to comply could result in an expensive breach of contract claim. 

AMT Futures Ltd v Boural [2018] EWHC 750 (Comm)

Please contact Caera Loughran for more information.

 

Balancing the rights of creditors with a judgment debtor's ability to repay

In Loson v Stack and another (2018), the Court of Appeal considered the balance between recognising a judgment creditor's need to be repaid within a reasonable timeframe with a debtor's realistic ability to repay the debt based on their income. A judgment debtor applied to allow her to repay circa £8000 in instalments of £50 per month. The application was refused, despite the Court of Appeal having 'considerable sympathy' for the applicant. 

Ms Loson's husband received a parking ticket in May 2010, when driving her vehicle. He refused to pay and bailiffs subsequently took possession of the car. Ms Loson lost in proceedings against the bailiffs, seeking damages and an injunction to restrain them from disposing of her vehicle. Approximately 8 years after Ms Loson's husband received the fine, the Court of Appeal in April 2018 analysed whether it was reasonable and proportionate for her to repay the debt due under a costs order in £50 instalments.  

The Civil Procedure Rules allow the courts to exercise a discretion in making Orders for the payment of monies - "Where a judgment or order has been given or made … for the payment of money, the creditor or, as the case may be, the debtor may apply in accordance with this rule for a variation in the date or rate of payment". 

The judgment creditor contended that repayment of £50 per month was unreasonable: even without taking interest into account, it would require 160 months (over 13 years) for Ms Loson to repay the debt. 

Lord Justice Patten in the Court of Appeal expressed sympathy for Ms Loson, stating that "the predicament in which [Ms Loson] finds herself seems to be largely, if not entirely, down to the failure of her husband to pay a parking fine for which he was responsible". However, ultimately the appeal was rejected and the right of the creditor to be repaid was reinforced by the Court. 

Despite the courts' willingness to review a debtor's income to establish whether they can repay a debt in a proportionate amount of time, ultimately creditors are entitled to receive what they are owed, plus interest, in a reasonable period of time, including using any lawful means of enforcement. 

Please contact Lauren Wills-Dixon for more information.

Losing defendant to pay only 40% of claimants' costs in successful group action

In Various Claimants v Wm Morrison Supermarkets Plc [2018] EWHC 1123 (QB), the Court of Appeal ordered the losing defendants (Morrisons) to pay only 40% of the claimants' costs. The Court considered that although successful and unsuccessful arguments in the claim overlapped, the claimants should still have adopted a more focussed approach to reduce time and cost.  

Background

The award for costs was made in a group action against Morrisons following their disclosure of personal data relating to 99,998 employees. The claimants argued that Morrisons was directly as well as vicariously liable for the actions for the employee who disclosed the data. Only the claim for vicarious liability succeeded. 

Morrisons argued that the costs order should reflect the fact that most of the claimant's time, effort, expense, disclosure and evidence had been directed to the unsuccessful direct liability claim.

The CPR rule on Costs

The court considered the general rule that the successful claimants should be entitled to their costs of the action. However, under CPR 44.2(2)(b) it could make a different order at its discretion. 

Morrisons argued that the court should balance the costs incurred in successfully defending the direct liability claims against the costs attributable to the vicarious liability claims.

The claimants' maintained that costs should be awarded in accordance with the general rule; if there were to be a discount, the bulk of their costs were "common costs": they had been incurred in relation to both aspects of the claimants' case. 

The distinction between the claims

The court held the claimants had indeed won overall, but lost on issues of direct liability. Direct liability and vicarious liability were sufficiently distinct to be regarded as substantially separate issues, although there was still a degree of overlap which was material.

The court held that the claimants could have adopted a more focussed approach when pursuing direct fault-based claims, by concentrating on areas which might yield success. The trial (judgment apart) could have been concluded in half the time if it had dealt with vicarious liability alone.

The court accepted that the claimants should be entitled to the costs of proving vicarious liability, including common costs so far as referable to the findings which led to vicarious liability being established. However, "the percentage chosen should not be a figure plucked, as it were, from the air but one which attempts to balance the costs of the losing party in respect of the costs of the issues on which it succeeded against those of the successful parties on the issues on which they succeeded". On this basis the court ordered that Morrisons pay 40% of the claimants' costs. 

Please contact Max Judge for further information.

 

An exception to the fraud exception - injunction preventing payment under guarantee discharged

Tetronics (International) Ltd v HSBC Bank plc (BlueOak Arkansas LLC intervening) [2018] EWHC 201 (TCC)

The fraud exception

Generally, a court will not intervene to prevent a bank making a payment in respect of a call on a guarantee. However, in Alternative Power Solution Ltd v Central Electricity Board [2014] UKPC 31, the Privy Council confirmed that a 'fraud exception' to this general rule applies where the beneficiary could not honestly have believed in the validity of its demand for payment and the bank was aware of this fact. 

Background

BlueOak Arkansas LLC (BlueOak) made a call on a guarantee provided by HSBC on behalf of Tetronics (International) Ltd (Tetronics). The contract between BlueOak and Tetronics contained an arbitration clause. Following the call, Tetronics applied for and obtained an ex parte injunction preventing HSBC making a payment in respect of the guarantee. Tetronics also commenced arbitration proceedings against BlueOak, whilst BlueOak applied for the injunction against HSBC to be discharged.

Judgment

Fraser J held that BlueOak had ignored 'cogent and compelling' evidence of fraud and could not have honestly believed in the validity of its demand under the guarantee. HSBC were held to be have been aware of the fraud following advice obtained from a US law firm and information provided by Tetronic's CEO. Therefore, the requirements of the fraud exception were satisfied.

Tetronics argued that the balance of convenience favoured upholding the injunction and relied on evidence that a reimbursement request from HSBC would result in Tetronics' immediate insolvency. However, the evidence relied upon by Tetronics was inconsistent with that presented in the related arbitration proceedings, in which Tetronics had conceded that the company's shareholders would be able to make additional contributions in order to satisfy any request for reimbursement from HSBC. Whilst the unavoidable insolvency of Tetronics would have favoured upholding the injunction, in the absence of such a prospect the balance of convenience favoured discharging the injunction.

Practical Implications

This case demonstrates that even where the requirements of the fraud exception are satisfied, 'extraordinary facts' are still required in order to satisfy a court that an injunction preventing payment by a bank is justified on the balance of convenience.

Tetronics failed in its attempt to show that the balance of convenience favoured upholding the injunction because of the inconsistency between the evidence presented in the English court proceedings and the parallel arbitration proceedings. 

Parties need to be aware of the risk that the content of private arbitration proceedings may be examined in parallel court proceedings, where the same or similar relief is sought from both the court and the arbitrator. Whilst no objections were raised in this case, parties to court proceedings may object to the consideration by a court of material relating to private arbitration proceedings. Finally, they should also be aware that facts and evidence relating to confidential arbitration proceedings may fall within the scope of the duty of full and frank disclosure to a court when seeking injunctive relief from the court without notice to the respondent.

For further information please contact Daniel Hovington

 

Key contact

Kate Menin

Kate Menin

Principal Knowledge Lawyer, Dispute Resolution
London

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