Legal News

Original news Re Ralls Builders Ltd (in liquidation); Grant and another v Ralls and others [2016] EWHC 1812 ( Ch), [2016] All ER ( D) 113 ( Jul). The Chancery Division determined that, as the joint liquidators’ application under section 214 of the Insolvency Act 1986 for a contribution from the company’s directors on a wrongful trading basis had failed, it was not appropriate to order the directors to add to the company’s assets in respect of the liquidators’ fees and expenses incurred in examining and advancing that unsuccessful claim. What was the background to this judgment? This was a wrongful trading claim brought under IA 1986, s 214. The liquidators, Steven Grant of Wilkins Kennedy and James Tickell of Portland, sought a £1.5m contribution to the company’s assets from three former directors of a South East building company that entered...

Original news: Mascareignes Sterling Co Ltd v Chang Cheng Esquares Co Ltd ( Mauritius) [2016] UKPC 21 What was this case about? Mascareignes retained Chang Cheng under an amended JCT Standard Form of Contract (1980 Edition) with the Contractor’s Designed Portion Supplement to design and construct an office building in Port Louis, Mauritius. During delivery, the character of the works evolved, resulting in substantial additional and substituted items (variations). At completion, the quantity surveyor—who effectively administered the contract—issued the final account, valuing the majority of the works on a measurement-and-valuation basis because of the extent of the variations. Mascareignes refused payment, so Chang Cheng commenced arbitration and succeeded in obtaining an award for the sum certified in the final account. Mascareignes appealed, contending the arbitrator was wrong to: sanction the widespread use of measurement and valuation in the final account, holding either that the...

Practical implications This ruling offers a helpful and clear demonstration of the court’s method when carefully judging, in the circumstances of a case, whether a party’s conduct under an agreement truly constitutes a repudiatory breach—either taken in isolation or viewed collectively—so as to allow the other party to accept the repudiation and terminate the contract. It addresses, in particular, in such disputes: the so-called Heisler qualification, namely the general principle that a party who declines to perform a contract, yet states an incorrect, inadequate, or no reason, may later justify objectively that refusal if facts then existing and at the relevant time supplied a proper basis for it, does not operate where “the point taken is one which if taken could have been put right” ( Heisler). In the view of Males J, the Heisler qualification can only arise where the breach in...

Practical implications This judgment demonstrates how the principles governing equitable set-off via a cross-claim function in an assignment, in this instance where a factor has taken over debts owed by customers to a supplier. The Court of Appeal concluded that, since the factor neither agreed with the supplier that no rebate would be available nor asked the debtor to notify it of any rebate, the debtor had no obligation to reveal any prior contractual rebate arrangements affecting the debt. Here, the scale of the rebate cross-claim almost eliminated the whole of Bibby’s demand. The clear potential for serious prejudice to a factor in such circumstances is therefore apparent and calls for the inclusion of suitably drafted contractual protections (see paras [49]–[53]). How did the set off issues arise in this debt factoring case? Under a Factoring Agreement from 2000, Bibby, acting as factor, acquired all of the...

Practical implications The court expressed disquiet that an incident underpinning the claim, said to have lasted only a few minutes, had spawned 13 lever-arch files of paperwork and statements. It was especially struck, and alarmed, that anyone might consider sizeable portions of that material relevant, not least because, as matters unfolded, nobody ever contended that any of it was relevant, and I was not taken to a single page or line during the evidence or the submissions. The court made clear it would not hold against the individuals the inclusion within their witness statements of plainly irrelevant material, as it could not tell whether they chose to include it, whether it appeared on advice from others...or whether shortcuts were adopted, with witness statements drafted for other proceedings...being repurposed for these proceedings. It did, however, state that it would take into account the needless...

Sainsbury’s Supermarkets Ltd v Bristol Rovers (1883) Ltd [2015] EWHC 2002 ( Ch), [2015] All ER ( D) 145 ( Jul) The Chancery Division determined that Sainsbury’s was entitled to terminate a conditional contract to purchase the defendant’s stadium, as a condition precedent—requiring Sainsbury’s to obtain an acceptable planning permission for a store to redevelop the ground as a supermarket—had not been satisfied. What was the background to the case? In March 2011, Sainsbury’s entered into a conditional agreement to acquire the Memorial Stadium, Bristol, from Bristol Rovers Football Club for £30m. At the same time, the club concluded an agreement with the University of the West of England ( UWE) to develop a new stadium. The intention was for Sainsbury’s to build a new supermarket on the Memorial Stadium site. The club would apply the purchase price to finance the new stadium project with UWE, to which it...

Practical implications The judgment: affirms the primacy of the compensatory measure of damages for breach, as articulated in The Golden Victory, and provides a clear treatment of the particular questions that arise when evaluating damages for anticipatory breach (renunciation) clarifies that the principle identified in The Golden Victory is not restricted to instalment contracts (contrary to what is sometimes suggested) but applies equally to one-off sale contracts sets out the approach to interpreting damages clauses. The dicta in this judgment therefore indicate that, if parties intend to exclude the common law principles for assessing damages, their contract draftsmen must draft accordingly, making it expressly plain within the damages clause that the parties have considered the full spectrum of damages issues and intend to displace the common law in every respect also noteworthy is Lord Toulson’s particular focus on the...

Practical implications arising from this judgment Practical implications arising from this judgment include: When your opponent is a litigant in person, adopt an even more hands-on approach than in matters where both sides are represented, anticipating and dealing with knock-on issues. For example, when an extension to a revised timetable was requested, the respondent’s solicitors asked whether it was sought for all outstanding directions, including disclosure and inspection. Where the opposing party is unrepresented, and especially if there are potential mental health concerns, help the court to identify ways for the party to avoid having to participate in court hearings without being debarred. See below (under ‘ The appeal—background facts’) for how the court shaped its order to accommodate any difficulties the litigant might face in complying. Mental health considerations should be factored in to ensure the...

Original news MT Højgaard a/s v EON Climate and Renewables UK Robin Rigg East Ltd and another [2015] EWCA Civ 407 The parties entered into a contract for the design and installation of offshore wind turbines. Defects arose in the foundations, prompting a dispute over who should bear the cost of remedial works. At first instance, the judge decided the claimant contractor had breached a warranty that the foundations would provide a 20‑year service life, but had not breached other clauses alleged by the defendant employers. The Court of Appeal, Civil Division, allowed the claimant’s appeal, finding there was no such warranty. The defendants’ cross‑appeal also succeeded, as the claimant had failed to comply with a provision concerning testing of the designs. What was this case about? The dispute centres on a specific design issue of fundamental concern to the various...

Why are the protocols being amended? In his Final Report on Civil Litigation Costs ( January 2010), Lord Justice Jackson proposed retaining the pre-action protocols, while introducing targeted changes to improve how they work and to keep pre-action costs proportionate. He also advised creating a specific protocol for debt claims where a business pursues an individual. In response, a CPRC sub-committee was established to review and recommend any necessary amendments to the pre-action protocols. Although the sub-committee is still considering drafts of some protocols, several have been issued and, subject to ministerial sign-off, are expected to commence on 6 April 2015. Below is a summary of the protocols being revised and the stage each has reached, with links to the latest drafts where available. We will provide further updates as the CPRC publishes more material and will revise our Practice Notes once the...