Key developments include the continued application of the court's tough new approach to compliance following the high profile Mitchell decision that we covered last time, as well as the introduction of legislation to bring in the government's proposed new "opt-out" class action for competition claims.

  1. Court of Appeal applies Mitchell guidance and finds defendant cannot rely on witness evidence served late

The Court of Appeal has held that a defendant Chief Constable’s late service of witness statements meant that it could not rely on any witness evidence in defending the claimant’s allegations (which included false imprisonment, assault, malicious prosecution and racediscrimination): Durrant v Chief Constable of Avon & Somerset Constabulary [2013] EWCA Civ 1624.

In doing so the Court of Appeal overturned the High Court’s decision to grant relief from sanctions and took an early opportunity to apply its own guidance in the Mitchell case. In the court’s judgment, the first instance judge did not approach the application with the focus or degree of toughness called for by the guidance in Mitchell. In particular, he did not appreciate that the two considerations specifically mentioned in the new CPR 3.9 (the need for litigation to be conducted efficiently and at proportionate cost, and the need to enforce compliance with rules, practice directions and court orders) are the most important considerations and should be given greater weight than other factors. Nor did he appreciate how much less tolerant an approach towards non-compliance is required by the new rule.

Significantly, in giving the judgment of the court, Richards LJ (who was also on the panel in the Mitchell appeal) stated: “if the message sent out by Mitchell is not to be undermined, it is vital that decisions under CPR 3.9 which fail to follow the robust approach laid down in that case should not be allowed to stand. Failure to follow that approach constitutes an error of principle entitling an appeal court to interfere with the discretionary decision of the first instance judge.”

As well as reinforcing the court’s tough approach to whether there is “good reason” for non-compliance, the decision underlines the need to apply for relief from sanctions promptly, even where a breach may be described as “trivial”. Here the court refused to permit the defendant to rely on two witness statements where the deadline was missed by just one day, as well as others for which the delay was more serious, in part due to the defendant’s failure to apply promptly for relief. The decision also illustrates how narrow the court’s focus will be on an application  for relief from sanctions; the starting point will be that the order imposing the deadline and sanction were appropriate when made, in the absence of any appeal or application to vary or revoke that order. Click here to read more.

  1. Court of Appeal overturns order granting “second bite at the cherry”

The Court of Appeal has overturned an order granting a second application for relief from sanctions for failure to comply with an unless order, with the result that the defendant is debarred from defending the claim: Thevarajah v Riordan [2014] EWCA Civ 15.

This decision continues the court’s tough line on compliance with rules and court orders, as established in the widely publicised Mitchell decision and subsequently applied in Durrant (see above). It shows in particular that where a party has been denied relief from sanctions, it will be very difficult to persuade the court to grant a second bite at the cherry. Where the second application for relief entails setting aside provisions of a previous order refusing relief (as will usually be the case), the court will not normally grant such an application unless there has been a material change of circumstances since the order was made, or the original decision was based on misstated facts, or there was a manifest mistake in formulating the order and, in any case, the application was made promptly. The decision also suggests that belated compliance with the rule or order breached will not ordinarily amount to a material change of circumstances for these purposes. Click here to read more.

  1. “Opt-out” class action for UK competition claims a step closer to reality

On Thursday 23 January the government introduced the Consumer Rights Bill to Parliament. The Bill includes proposals for a new collective action for competition claims, together with other proposals for reforming the UK regime for competition law private actions. This follows initial publication of the government’s proposals in January 2013 (click here for more detail) and the draft Bill in June 2013.

If passed by Parliament, the Bill will create a new “opt-out” collective action for competition law claims on behalf of both consumers and businesses in the Competition Appeal Tribunal (CAT). The CAT will be required to certify whether an action should proceed on an opt-in or (for UK-domiciled claimants) opt-out basis. With an opt-in action, as the name suggests, claimants need to opt in if they wish to benefit from the claim. In contrast, with an opt-out action, the claim is brought on behalf of a defined group, without the need to identify individual group members; all those who fall within the group will be bound by the result (including a settlement) unless they opt out of the case.

In terms of who will be able to act as a representative to bring an opt- out collective action, this includes any claimants (individuals or businesses) who have suffered a loss, as well as genuinely representative bodies such as trade associations. However, a person may only be authorised to act as a representative in proceedings if the CAT considers it ”just and reasonable” for that person to do so – even if they are a class member. In the draft Bill the “just and reasonable” requirement applied only if the proposed representative was not a class member.

The Bill also includes a new opt-out collective settlement regime, similar to the Dutch mass settlements regime. This will allow parties to ask the CAT to approve an agreed settlement on an opt-out basis (for UK-domiciled claimants) without the need for a claim to be brought.

  1. Commercial Court rejects claim to litigation privilege

In the latest decision illustrating the court’s strict approach when applying the test for litigation privilege, the Commercial Court has rejected a defendant’s claim to privilege over reports prepared by third parties (a bank and a firm of accountants) regarding a potential entitlement to deferred consideration following a business sale: Starbev GP Ltd v Interbrew Central European Holding BV [2013] EWHC 4038 (Comm).

In relation to the bank documents, the court held that litigation was not in reasonable prospect at the time of preparation. The bank was instructed to investigate what were mere suspicions on the part of the defendant; unless and until that investigation confirmed there was substance to the suspicions, there was no real reason to anticipate litigation. In relation to the accountants’ report, the defendant had not established that it was for the dominant purpose of the litigation. That was in part because the report had been commissioned and the underlying work completed at a time when litigation was not (as the court concluded) in reasonable prospect; the court did not accept that the purpose of the report had been transformed by an instruction to put the conclusions in writing, even if litigation was in reasonable prospect by that later stage.

The key message is to consider and record, at the stage a report is commissioned, whether litigation is contemplated and (if this is the case) that it is the purpose of the report. Such a statement will not be definitive but may assist in evidencing the required elements for litigation privilege. As ever, if there is any room for doubt, the safest course is to assume that the report will not be covered by litigation privilege. Click here to read more.

  1. High Court applies new express powers to limit witness evidence

In what appears to be the first High Court decision applying the court’s new express powers to limit factual witness evidence, the court has restricted the number of witnesses that may be called by a claimant in relation to particular issues in a personal injury case: MacLennan v Morgan Sindall (Infrastructure) Plc [2013] EWHC 4044 (QB). Click here to read more.

  1. Court of Appeal finds that default provisions in share purchase agreement are unenforceable penalties

A recent Court of Appeal decision has highlighted the rule against penalties, demonstrating that a penalty can include not only a requirement to pay a sum but also the loss of the right to a future payment and a requirement to transfer assets at an undervalue: Talal El Makdessi v Cavendish Square Holdings BV [2013] EWCA Civ 1539.

The case shows the risks involved in drafting clauses for payment or forfeiture on breach and the need to carefully consider in each case the tests for what is a penalty and the form of drafting that is used. Click here to read more.

  1. Cartel follow-on damages claim did not come within jurisdiction clause

The Court of Appeal has held that a claim for losses caused by an Italian cartel did not come within a jurisdiction clause giving non- exclusive jurisdiction to the English courts: Ryanair Ltd v Esso Italiana Srl [2013] EWCA 1450.

The case was argued on the basis that the claimant had a claim in both contract and in tort, and the tort claim (for breach of statutory duty) was so closely connected to the contract claim that the parties must be taken to have intended the jurisdiction clause to cover it. The Court of Appeal, overturning the High Court decision, decided there was no claim in contract so that argument fell away. The court also rejected any suggestion that the tort claim alone could come within the clause, although this part of the judgment is obiter.

The scope of a jurisdiction clause is a matter for interpretation in every case, but this decision suggests that in most cases it will be difficult to persuade a court that cartel follow-on damages claims fall within a jurisdiction clause contained in a supply contract with a cartel member. Click here to read more.

  1. Substantial court fee increases proposed for commercial claims

The Ministry of Justice (MoJ) has issued a consultation proposing substantial court fee increases. For certain types of proceedings, these include ”enhanced” fees aimed at recovering more than the cost of running the services to which they relate. The key proposals include:

Introducing percentage issue fees for money claims, calculated as 5% of the value of the claim subject to a cap of £10,000, or possibly £5,000 for claims for unspecified sums. (At present, issue fees range up to £1,670 for claims of more than £300,000.) For commercial money claims (in the Commercial Court, Chancery Division, or Technology and Construction Court) there are alternative proposals to either (i) apply a higher cap to the issue fee, at either £15,000 or £20,000; or (ii) introduce a hearing fee of £1,000 per day, or £500 for hearings of half a day or less. (At present there is a fixed hearing fee of £1,090 for a multi-track trial regardless of length.) Removing allocation and listing fees, ending the process of refunding hearing fees when early notice is given that a hearing is not required, and increasing Court of Appeal fees.

Click here to read more.

  1. Review of practice and procedure in the Chancery Division of the High Court: final report published

A review of current practices and procedures for the conduct of business in the Chancery Division, known as the “Chancery Modernisation Review”, has been undertaken over the past year led by Lord Justice Briggs. The final report  was published recently and puts forward more than 100 recommendations, many of which were foreshadowed in a provisional report published for consultation in July. The report has been welcomed by the Chancellor of the High Court, who commissioned the report. Steps will presumably now be taken toward implementing the recommendations, though the report notes that full implementation is dependent on improvements to IT provision which are currently being addressed by the courts service. Key recommendations include:

Increased use of full docketing, i.e. case management and trial by the same judge.

A move to fixed length trials.

The strict focus of case management for trial upon the issues in the case.

Convergence in practice and procedure between courts doing similar work.

The provision of better access to justice for litigants in person.

  1. High Court finds damages not an inadequate remedy due to contractual limitation clause and refuses interim injunction

The High Court has refused to grant an interim injunction, holding on the basis of prior authority that a limitation clause excluding certain heads of liability did not mean that damages would be an inadequate remedy: AB v CD [2014] EWHC 1 (QB).

However, the judge (Stuart-Smith J) admitted a “degree of unease at the result” and a concern that his approach may be “too inflexible in a case such as the present”. He therefore granted permission to appeal. Click here to read more.

  1. US Supreme Court rejects jurisdiction over foreign corporation based on its subsidiary’s contacts with the forum

For the first time ever, the United States Supreme Court has addressed whether a foreign corporation may be subjected to a court’s general jurisdiction based on its subsidiary’s contacts with the forum state: Daimler AG v. Bauman, No. 11-965, 2014 WL 113486 (U.S. Jan. 14, 2014). Rejecting the exercise of jurisdiction, the Court held that a foreign company was not subject to general jurisdiction in California, based on its domestic subsidiary’s activities in the state, on a claim arising out of events that all took place outside the United States.

Moreover, the Court went out of its way to delineate substantial limits on courts’ ability to exercise general jurisdiction over corporate defendants. General jurisdiction subjects a defendant to a lawsuit in the forum based on activities conducted anywhere, even outside the forum. The Court’s decision in Daimler makes clear that the assertion of general jurisdiction over a foreign corporate defendant, for conduct not directed at the forum, presents a difficult challenge for plaintiffs. Click here to read more.

  1. Consultation on proposed amendments to US federal rules on discovery

The US Federal Judicial Conference’s Advisory Committee on Civil Rules (the “Advisory Committee”) has proposed a series of amendments to the US Federal Rules of Civil Procedure—the rules that govern the conduct of civil proceedings in the US federal district courts. Among other issues, the amendments are intended to address and provide for proportionality in the discovery process, as well as the establishment of uniform standards for the imposition of sanctions where a party fails to preserve and produce discoverable information. Click here to read more.