Retrospective effect

When courts state what the law is in a particular case, its decision has a retrospective effect. This is inevitable not only in relation to the case before the court, in which the events must have occurred before the judge’s decision is made changing the law, but also in relation to other cases in which the law as so stated will be applied. This ability to change the law retrospectively can have serious consequences for those affected by a ruling. For example, the recent Supreme Court decision in Jones v Kaney, which removed immunity from suit from experts in respect of court work, will result in claims being made against some experts relating to work done as long ago as 2005, despite the fact that they may well not be insured against such claims. This is because, following Awoyomi v Radford which considered the effect of the abolition of barristers’ immunity from suit in Hall v Simons, the loss of immunity will have occurred on the date of the negligent conduct of Dr Kaney which took place in November 2005.

The House of Lords used to be bound by its own decisions but this is no longer the case, as Hall v Simons illustrated by overruling the earlier House of Lords decision in Rondel v Worsley. The House of Lords issued a practice statement in 1966 which said that where too rigid an adherence to precedent could lead to injustice in a particular case and an undue restriction of the proper development of the law, the House of Lords could depart from its previous decisions. A v Hoare and Sempra Metals Ltd v Inland Revenue Commissioners, both discussed below, illustrate what can happen when the House of Lords (now the Supreme Court) changes its mind.

Hoare v UK – costs consequences

(2011) ECHR 733 www.bailii.org/eu/cases/ECHR/2011/722.html

This decision of the European Court of Human Rights (ECtHR) is the final, or at least the most recent, chapter in the extraordinary case of Iorworth Hoare, known in the media as the lottery rapist. He was convicted in 1989 for attempting to rape Mrs A and was sentenced to life imprisonment because he was a serial sex offender. Whilst on day release, he bought a National Lottery ticket and won £7 million.  

Mrs A had tried to sue him after the attempted rape but he had no money at that time. Hearing about his lottery win, she tried again in 2004, shortly before he came out of prison.  

There is a three year limitation period for personal injury claims under s11 of the Limitation Act 1980 which can be extended under s33 where it is equitable to do so. The time limits for torts which are not personal injuries cannot be extended. Mr Hoare was advised by counsel that Mrs A’s claim was time-barred. This was a correct statement of the law at the time because in 1992 the House of Lords had held in Stubbings v Webb that the s33 discretion to extend time did not apply to cases of deliberate assault or trespass to the person. Mr Hoare therefore rejected Mrs A’s offer to settle the claim for about £25,000.

The House of Lords decision in A v Hoare

To cut a long story short, the House of Lords decided to reverse its decision in Stubbings, ruling that such claims were personal injury claims and the s33 discretion to extend time applied to them. The court held that the position had been changed radically by its decision in Lister v Hesley Hall Ltd in 2002 in which their Lordships had decided that sexual abuse was not necessarily outside the scope of an employment. As Lord Hoffman put it in Hoare, the large number of claims for sexual abuse by employees that followed threw into relief the anomalies created by Stubbings. The unsatisfactory character of the law in this area had also been raised by a Law Commission report in 2001 which described the effect of Stubbings as anomalous.

The case was remitted to a first instance judge who extended time for Mrs A’s claim and awarded her damages of £50,000 and her costs of more than £500,000 (her lawyers had been acting on a no win no fee basis).

European Court of Human Rights

Mr Hoare took his case to the European Court of Human Rights arguing that the costs order against him interfered with his possessions within the meaning of Article 1 Protocol No 1 of the European Convention on Human Rights. He also argued that the process whereby - as he put it - he had had to pay for a change in the law was in breach of his right to a fair trial under Article 6. The court rejected both arguments. Any interference with the applicant’s possessions was lawful and the costs incurred by Mrs A were not unreasonable given the fact that they covered three levels of jurisdiction. As for Article 6, the court noted that Mr Hoare had been warned by his lawyers that there was a risk that the House of Lords might find against him by overturning Stubbings but he refused to settle.

The duty to anticipate a change in the law

The case of Hoare v UK illustrates the potential consequences of changes in the law. It also raises the question of a lawyer’s duty to his client to anticipate a change in the law and how and when to advise him about it. A solicitor was criticised recently for such a failure in Amalgamated Metal Corporation plc v Wragge & Co. The claim concerned an unauthorised settlement in 2003 concerning claims for repayment of advance corporation tax (ACT). The claim was part of a group action set up to deal with claims for repayment arising from the European Court of Justice’s ruling in Metallgesellschaft Ltd v Inland Revenue Commissioners that the ACT rules infringed EC law.

At that time compound interest was not recoverable at common law. The solicitor at Wragge & Co accepted an offer from Her Majesty’s Revenue and Customs which prevented her client from participating in the compound interest claim in the ACT group action. She argued at trial that the prospects of success in claiming compound interest were “very difficult” and that this accurately reflected the orthodox view in 2003 of a reasonably competent solicitor. Unfortunately for her, the settlement occurred two weeks after the substitution of Sempra Metals Ltd as the lead claimant in the action and an announcement that the argument for compound interest was to be the primary contention. In 2007 in Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners the House of Lords held that compound interest was recoverable. The judge held that there had been a failure to offer appropriate advice to the client about the possibility that the law might change.

On that occasion, counsel was not involved. In contrast, in Williams v Thompson Leatherdale counsel had been involved in a “big money” divorce acting for the wife. The defendant solicitors concluded the divorce settlement in August 2000, a month after argument had been heard by the House of Lords in White v White. Judgment was given in October 2000 and, as had been widely anticipated, the decision changed the law in favour of wives in “big money” cases.

Neither Mrs Williams’ solicitors nor counsel advised her that the House of Lords was going to be making a decision which could change the law in her favour. Nor was she advised about the decision before an application was made for a consent order in November 2000. She sued them for negligence, claiming that she would have postponed the settlement of her claim until after the decision in White had she been properly advised.

Even though it was accepted that the progress and importance of the case had been common knowledge among family lawyers, the judge did not criticise the two partners in question for their ignorance of the case and rejected the suggestion that they should have had a system in place to alert them to appellate judgments concerned with family law. It should have been counsel’s role to explain to Mrs Williams the potential implications of White and his failure to do so was negligent.