Below is a selection of articles posted to our "litigation notes" blog since our litigator's yearbook bulletin on 15 December 2014.  

This month's developments include the government's announcement of a huge planned increase in the cost of issuing court claims, major changes to EU jurisdiction rules which apply to claims started since 10 January, and a newly redrafted CPR Part 36 on offers to settle that will take effect in April. We also report on interesting cases relating to settlement, disclosure, appeals and other issues.  

You can visit the blog any time for the latest updates on commercial litigation topics at:  

http://hsfnotes.com/litigation/  

  1. Courts to charge issue fees of 5% of claim value
  2. Recast Brussels Regulation applies to proceedings commenced from 10 January
  3. Contracts with consumers – where can a business sue and be sued?
  4. Significant changes to CPR Part 36 from April 2015
  5. Think twice before withdrawing a Part 36 offer
  6. A reminder of the need to be clear whether settlement negotiations are subject to contract
  7. Court of Appeal finds clear breach of unless order for e-disclosure
  8. Court of Appeal decision underlines dangers of delay in filing notice of appeal
  9. High Court provides guidance on waiver of sovereign immunity
  10. Article published on dealing with distressed companies
  11. Other contentious publications

1. Courts to charge issue fees of 5% of claim value

The government announced on 20 January that it will go ahead with its proposal to introduce percentage issue fees for money claims over £10,000, calculated as 5% of the value of the claim subject to a cap of £10,000 (see our post summarising the proposals put forward in its December 2013 consultation). Issue fees currently range up to £1,920 for claims of more than £300,000, so the new fees will mean a fivefold increase for claims at that level.

The government has however decided against implementing its proposal to introduce even higher fees for claims in the Commercial Court, Chancery Division and Technology and Construction Court. These would have involved either a higher cap to the issue fee (either £15,000 or £20,000) or a new daily hearing fee (£1,000 per day, or £500 for hearings of half a day or less).

In addition, the government is consulting on further proposals to raise fee income, including a significant increase in application fees in civil proceedings, from £155 to £255 for a contested application and from £50 to £100 for an application without notice or by consent. That consultation will be open until 27 February.

The government’s decision to go ahead with substantial fee increases has been met by expressions of concern by various bodies, including the senior judiciary and the Civil Justice Council, as to their potential impact on access to justice as well as London’s competitive position as a centre for international dispute resolution. We share those concerns, though we welcome the government’s decision to abandon its proposals to introduce further increases for commercial claims.

As the new 5% issue fee is an “enhanced fee”, meaning that it is aimed at recovering more than the cost of the services to which it relates, it must be introduced by statutory instrument. The government has said it will prepare and bring forward the necessary legislation so that the new fee can take effect before the start of the 2015/16 court term, subject to Parliamentary time being made available.

2. Recast Brussels Regulation applies to proceedings commenced from 10 January

The recast Brussels Regulation introduces significant changes to the EU rules on jurisdiction and the enforcement of judgments for proceedings commenced from 10 January 2015 (Regulation (EU) 1215/2012).

The key practical implications for parties based both within and outside the EU are outlined in our recent post New EU jurisdiction rules apply from 10 January: Do you know where you can sue and be sued?.

We have also published a Handy client guide to jurisdiction under recast Brussels Regulation: England and Wales featuring a decision tree to help determine whether the English court will have jurisdiction over a dispute under the new rules.

3. Contracts with consumers – where can a business sue and be sued?

Where a business has directed its activities to an EU member state in which a consumer is domiciled, two consequences follow: (i) it can generally only sue the consumer in that member state; and (ii) the consumer can choose to sue the business in that member state (among other options). Since 10 January 2015, that applies regardless of whether the business is itself EU domiciled or has any presence in the EU (see our post summarising the key changes under the recast Brussels Regulation).

The Court of Appeal has considered the test of when a business directs its activities to a member state, in the context of similar rules which apply to determine jurisdiction as between England and Wales, Scotland and Northern Ireland: Wood v Hewitsons LLP [2014] EWCA Civ 1698.

Here the question was whether an English firm of solicitors were directing their activities to Scotland and therefore could only sue their Scottish domiciled client in Scotland. The court applied the principles laid down by the CJEU in Peter Pammer v Reederei Karl Schluter GmbH & Co KG [2012] CLR 972, concluding there was nothing to suggest the nature of the activity was international and the activities were therefore not directed to Scotland.

The case is of interest as there are relatively few cases applying thePammer principles in practice, and the court in this case appears to have taken a relatively strict approach on the facts in the context of professional services. Click here to read more.

4. Significant changes to CPR Part 36 from April 2015

CPR Part 36 contains a set of rules aimed at encouraging parties to settle their disputes. It does this by imposing sanctions where a party refuses an offer to settle made under Part 36 but then fails to get a better result by going to trial.

Although Part 36 is generally seen as one of the success stories of the Civil Procedure Rules, its provisions are highly technical and have led to a significant amount of case law. Part 36 has been revised a number of times to address various issues or uncertainties, and is being revised again following a review by the CPR Committee.

The new version of Part 36 will apply to offers made on or after 6 April 2015. Click here to read more.

5. Think twice before withdrawing a Part 36 offer

A recent High Court decision illustrates the drawbacks of withdrawing a Part 36 offer to settle, namely the potential loss of some or all of the costs benefits that would otherwise have arisen if the opponent fails to beat the offer: Uwug Limited (in liquidation) v Ball [2015] EWHC 74 (IPEC).

In this case, the defendant withdrew his Part 36 offer four months after it was made. The case went to trial and the claimant’s damages were less than the amount offered. As a result, the claimant was not awarded his costs from the date the court said he should have accepted the offer. However, he was not ordered to pay the defendant’s costs from that date, as would almost certainly have been the case if the offer had not been withdrawn. Click here to read more.

6. A reminder of the need to be clear whether settlement negotiations are subject to contract

The High Court has held that a binding settlement was agreed in an exchange of e-mails between the parties’ solicitors despite their subsequent failure to agree formal terms: Bieber v Teathers Limited[2014] EWHC 4205 (Ch).

The decision acts as a reminder of the importance of making a settlement offer expressly “subject to contract”, where it is not intended that a binding agreement will be reached by simple acceptance. Here the absence of those words was significant, as were references to the offer being “a take it or leave it offer” and “a final gesture to reach settlement”. Even a reference in the correspondence to the offer being “in principle” did not, in the context, mean that the offer was conditional. The fact that, subsequently, the parties were prepared to negotiate the terms of a formal settlement agreement also did not mean they had not already entered into a binding agreement. Click here to read more.

7. Court of Appeal finds clear breach of unless order for e-disclosure

The Court of Appeal has held that claimant liquidators were in breach of an “unless order” for e-disclosure, overturning the High Court’s decision that there was no breach despite the mistaken omission of certain important categories of documents from the list: Smailes v McNally [2014] EWCA Civ 1296. The result was that the liquidators’ claim was struck out. (Note: The case was decided at the end of July but the transcript has only recently become available.)

The High Court’s decision in this case had suggested that the court might be slow to find a breach of an unless order for disclosure based on omissions from the list. In particular, it seemed to indicate that so long as a search for disclosable documents was carried out in good faith and was fair and proportionate, the court was unlikely to find there was a breach just because some documents were missed. In contrast, the Court of Appeal has concluded that the omission of a highly relevant category of documents, which the liquidators knew were disclosable and had promised to disclose, was a clear breach of the order. The absence of bad faith did not necessarily mean that the order was complied with; the question was whether a reasonable search had been conducted.

The Court of Appeal’s decision suggests the courts might be readier than it had seemed to find that a party is in breach of an unless order for disclosure. However, it remains unlikely that showing some documents have been missed will be enough, in itself, to establish a breach, particularly where there are disputes about the existence or relevance of further documents. This case was quite unusual in that the liquidators had admitted that important documents existed and had promised to disclose them. Click here to read more.

8. Court of Appeal decision underlines dangers of delay in filing notice of appeal

The Court of Appeal has confirmed that the courts will apply the same rigorous approach to a retrospective application to extend time for filing a notice of appeal as they do to an application for relief from sanctions: R (Dinjan Hysaj) v SoS for the Home Department;Fathollahipour v Aliabadibenisi; May v Robinson [2014] EWCA Civ 1633. The guidance set out in the high-profile Mitchell case, as clarified in the subsequent Denton judgment (see post), therefore applies.

The reasoning is that a party who is out of time for filing a notice of appeal is subject to an implied sanction, namely the loss of the right to pursue an appeal. Accordingly, an application for an extension of time is analogous to an application for relief from sanctions. The court reached its conclusion somewhat reluctantly, saying it did not consider any other course open to it in light of the Court of Appeal’s previous decision in Sayers v Clarke Walker [2002] EWCA Civ 645 which had been consistently understood as equating the two types of application.

The decision also acts as a reminder that the 21 day time limit for filing a notice of appeal with the appeal court runs from the date on which the lower court pronounces its decision, not when the order reflecting that decision is drawn up or sealed (which may be some days later). The time limit is not extended by an application to the lower court for permission to appeal, or an adjournment of that application, or the timing of the lower court’s determination of the application. Although the Court of Appeal did not agree that this was a “trap for the unwary”, it is certainly something that can trip up those less familiar with the rules. Click here to read more.

9. High Court provides guidance on waiver of sovereign immunity

In a recent decision, the High Court considered the scope of sovereign immunity provided by section 1 of the State Immunity Act 1978 (the “1978 Act“): High Commissioner for Pakistan In the United Kingdom v National Westminster Bank [2015] EWHC 55 (Ch).

The court expressed the view that once sovereign immunity is waived by a State instituting proceedings, it is waived for the duration of those proceedings, including any new claims that the State could have predicted would arise from the original proceedings.

The discussion in this case sheds some light on the boundaries of an area of law that has seen limited judicial consideration. It remains to be seen whether Pakistan will appeal, and so give a higher court an opportunity to provide further guidance. For more detail on the case, see this post on our PIL Notes blog.

10. Article published on dealing with distressed companies

Recent developments, including proposed changes to the UK insolvency regime, present an increasing number of pitfalls for parties involved in the management of, and transactions with, distressed companies. Claims against stakeholders in insolvent companies and the third parties with whom they deal are becoming increasingly frequent.

Partners Natasha Johnson and John Whiteoak and Andrew Cooke, an associate, each in our dispute resolution team, have published an article in the January – March 2015 edition of Corporate Disputes magazine which considers the issues and steps that parties dealing with distressed companies might take to mitigate risk. Click here to download a PDF of the article: “Dealing with Distressed Companies”. 

11. Other contentious publications