Litigation Update: October 2015
Published on 16th Oct 2015
Welcome to the latest edition of Osborne Clarke’s quarterly litigation update.
When a dispute arises, parties rarely have any desire to spend months or even years locked in protracted court proceedings. In this edition we look at two common tactics for resolving a dispute at an earlier stage, along with new possible routes being created by an ever-more proactive judicial system. Used well, each of these can be extremely powerful, but an indiscriminate approach can reduce their effectiveness or, at worst, work against the party employing them.
We also ask whether there is a place in English law for the continental concept of good faith in a contract, and look ahead at some of the key developments in force and on the horizon.
Changes in force from 1 October 2015
From 1 October 2015, three different provisions came into force which will be of interest to in-house and disputes lawyers:
- The new Financial List takes effect for significant claims in the financial services sector
- The ADR Regulations 2015 come into effect
- Amendments have been made to the CPR to provide for the coming into force of the Hague Convention on Choice of Courts
Summary justice: Resisting the siren call
The route from a High Court claim being issued to full trial is invariably neither swift nor straightforward. Parties frequently disagree about whether options such as having split trials to determine liability and quantum, or determining preliminary issues, will allow disputes to be resolved more easily, or simply drag out proceedings further.
It can be very tempting to try to circumvent most of this by applying to the court for summary judgment early on. However, the cost consequences of an unsuccessful application can be significant and it is not uncommon for successful applications to be appealed, successfully. Two recent Court of Appeal cases give some useful guidance on the limits of what can be determined at the summary judgment stage, and therefore where this powerful weapon should or should not be deployed.
Part 36: “Total capitulation” offers do not count
There are many good reasons for a party in dispute to reach out an olive branch with a settlement offer. Part 36 of the CPR encourages this by providing benefits if an offer that is not accepted is later beaten at trial. As the High Court has confirmed in a recent case, however, for the benefits of Part 36 to apply, an offer must be a “genuine attempt to settle”. An offer which simply invites “total capitulation” by the other side will not count, and will not attract the benefits of a Part 36 offer.
Speeding up the treadmill: New shorter and flexible procedures for High Court litigation
From 1 October 2015, two new pilot procedures are available for certain claims: the Shorter Trial Procedure, and the Flexible Trial procedure. In many cases, these procedures will be a great improvement over the current process. However, the very speed of litigation, frontloading of costs and absence of a proper pre-action stage under these procedures may mean that disputes started under one of these procedures are more likely to go all (or most) of the way to trial. For some cases this could result in missed opportunities to settle early on, or at all.
Keeping the faith: Contractual discretion and implied duties
English courts place great importance by parties’
freedom to contract, and have repeatedly resisted the temptation to impose on
parties general duties of good faith, the like of which are fundamental in many
other European jurisdictions. Nevertheless, particularly where contracts are
long-term and depend on close cooperation between the parties, those parties
are not entirely free to act as they want.
In Portsmouth City
Council v Ensign Highways, the Court was prepared to imply a term that the
Council must act “honesty and on proper grounds and not in a manner that is
arbitrary, irrational or capricious.” There is still no place, it seems, for a
general duty of good faith, but when it comes to the operation of specific
clauses, the law may reach the same place by different means.
What’s coming up?
Following the significant increase in issue fees on 9 March 2015, further increases are expected. The Government has confirmed that small increases to certain categories of fees (such as applications) will be implemented imminently. More significantly, the Government has also been consulting on much larger increases, with issue fees potentially rising to £20,000 or beyond for higher value cases. No decision has been reached yet, but another large increase in the near future would undoubtedly prove controversial.
This autumn the Supreme Court’s judgment is expected in one of the more early anticipated cases this year, Beavis v Parking Eye. The case has attracted interest for a number of reasons. As well as the Court of Appeal’s judgment seeming to open the door to a new class of enforceable penalty, the use of crowdfunding to fund the claimant’s legal costs raises a number of questions.
Interested in other areas?
As well as our
quarterly litigation update, we produce regular updates on a number of other
topics, including Asset Tracing and
Enforcement and IP. Please let us know if you would like to receive any of these updates by email in the future.
