Law reports

Law reports

CommercialInjunction - consent order - application to vary - jurisdiction to delete termGerrard Ltd v Read and Another: ChD (Mr Justice Blackburn):21 December 2001The claimant sought and obtained an injunction against the defendants, a former employee and his current employer, as a result of the admitted misappropriation and misuse of the claimant's confidential information.

The order was made by consent after prolonged negotiations.

All sides were represented by experienced solicitors and counsel.

The injunction prohibited the defendants from dealing with an identified list of clients of the claimant for a period of nine months.

There was no provision for review or discharge of the injunction.

The first defendant applied for a variation of the injunction on the grounds that it was unenforceable since it was an unreasonable restraint of trade.

Monica Carss-Frisk QC and Thomas Croxford (instructed by Richards Butler) for the first defendant; Andrew Stafford QC (instructed by Stephenson Harwood) for the claimant.Held, refusing the first defendant's application, that it was established law that a court had power to vary a consent order where the whole order was vitiated; that the jurisdiction extended to cases where a term of the consent order, rather than the whole order itself, was unenforceable; but that since the defendant had failed to show that the term in question was unenforceable it was not appropriate to delete it.CostsOrder for costs - application for discovery against innocent party - involvement in tortious act of another - innocent party entitled to recover costsTotalise Plc v Motley Fool Ltd and Another (No 2): CA (Lords justice Aldous, Sedley and Arden):19 December 2001The claimant company complained about the content of a number of postings on the second defendant's Web site by a person using the name 'Zeddust'.

The claimant company alleged that the postings contained defamatory statements and requested removal of the postings, and the withdrawal of Zeddust's posting rights.

It also asked for disclosure of Zeddust's identity and registration details.

The second defendant agreed to remove the postings and to suspend Zeddust's account, but refused to disclose personal details about any account to a third party.

The claimants applied for discovery under the principle in Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133.

The judge concluded that he had jurisdiction to make the order requested and summarily assessed the costs to be paid by the second defendant at 4,817.

The second defendant appealed.John Higham QC (solicitor-advocate) and James Abrahams (instructed by Stephenson Harwood) for the second defendant; Patrick Moloney QC (instructed by DLA) for the claimants.Held, allowing the appeal, that Norwich Pharmacal applications were not ordinary adversarial proceedings, where the general rule was that the unsuccessful party paid the costs of the successful party, but were akin to proceedings for pre-action disclosure where costs were governed by civil procedure rule 48.3; that, in general, the costs incurred should be recovered from the wrongdoer rather than from an innocent party, and in a normal case the applicant should be ordered to pay the costs of the party making the disclosure, including the costs of making the disclosure; that where a party supported or was implicated in a crime or tort, or sought to obstruct justice being done, the court would require that party to bear its costs and, if appropriate, pay the other party's costs; and that, accordingly, in the circumstances, the second defendant should have recovered their costs.CRIMINALConcealing debts in anticipation of winding up - defence of 'no intent to defraud' - not imposing legal burden of proof on defendant R v Carass: CA (Lord Justice Waller, Mr Justice Rougier and Mr Justice Stanley Burnton): 19 December 2001The defendant was charged with offences of concealing debts in anticipation of a winding up, contrary to section 206(1)(a) of the Insolvency Act 1986.

At a preparatory hearing the judge ruled that the defence contained in section 206(4) of 'no intent to defraud' imposed on the defendant a legal rather than an evidential burden of proof.

The defendant appealed against that ruling and argued, in addition, that section 206(4) was incompatible with article 6 of the European Convention on Human Rights.John Lodge and Nicholas J Johnson (instructed by Hutchinson & Buchanan, Ripon) for the defendant.

Guy Kearl and Christopher Batty (instructed by Crown Prosecution Service, Northallerton) for the prosecution.

James Eadie (instructed by Legal Director, Department of Trade and Industry) for the secretary of state.Held, allowing the interlocutory appeal and reversing the judge's ruling, that the onus on those seeking to persuade the court that it was necessary, in any case, to impose a legal burden of proof on a defendant was a heavy one; that there was no justification for imposing a legal burden of proof on a defendant seeking to raise the defence in section 206(4) because of 'some threat to society'; and that, accordingly, it was appropriate to read the word 'prove' in the subsection as 'adduce sufficient evidence', with the result that the burden was evidential only.

(WLR)EDUCATIONSpecial educational needs - local education authority reconsidering decision not to make statement - right of appeal against further refusalO v Harrow London Borough Council: CA (Lords Justice Simon Brown, Waller and Sedley):18 December 2001The parents of S appealed against a decision of the local education authority, following his assessment, not to make a statement of his special educational needs.

On the parents' appeal, the Special Educational Needs Tribunal remitted the case to the authority for reconsideration.

Without a further assessment, the authority again decided not to make the statement.

The parents again appealed.

The tribunal struck out the second appeal for lack of jurisdiction under section 325 of the Education Act 1996.

Mr Justice Maurice Kay (see [2001] Gazette, 13 September, 33) dismissed the parents' appeal against the tribunal's decision.

The parents appealed.John Friel (instructed by Blackwell Partnership) for the parents; Richard McManus QC (instructed by the Borough Secretary and Solicitor to the Council, Harrow) for the authority.Held, allowing the appeal, that, although a right of appeal only arose under section 325 when the local education authority had declined to make a statement of special educational needs 'after making an assessment', the initial assessment in the case was sufficient to found the second appeal, so that the parents should not be driven to seek the cumbersome remedy of judicial review; and that, accordingly, the tribunal had jurisdiction to entertain it.

(WLR)Human RightsFreedom of expression - Public interest in disclosure of press source - press ordered to disclose indirect means of identifying sourceInterbrew SA v Financial Times and Ors: ChD (Mr Justice Lightman): 19 December 2001The claimant had been considering a takeover of a South African company.

An unknown person (the source) obtained a copy of the claimant's confidential presentation on the possible takeover, doctored it and gave it to the defendants.

The defendants' subsequent publication of the information in one form or another affected the share prices of the claimant and the South African company.

The source had thus successfully used the defendants to manipulate the markets.

The claimant then applied to the court for injunctive relief against the defendants for the preservation and delivery up of the relevant documentation in order that it might be able to discover the identity of the source.Charles Hollander QC and Alan Maclean (instructed by Simmons & Simmons) for the claimant; Michael Tugendhat QC, Richard Parkes and Jonathan Barnes (instructed by Farrer & Co) for the defendants.Held, ordering that the defendants deliver up any documents that they had received directly from the source to the claimant; that it was necessary to balance the freedom of expression of the defendants with the need of the claimant to identify a possible disloyal employee and to prevent further disclosures; that the claimants could succeed only if the disclosure was so important that it overrode the public interest in protecting journalistic sources in order to ensure free communication of information to and through the press; that the claimant had established that it had a legitimate aim of using the documents it sought to identify the source as the means of removing a continuing threat of damage to its business; and that on the exceptional facts of the case the claimant had shown that that aim was so important that it overrode the public interest in protecting journalistic sources.

Legal aidFull certificate - work under certificate - absence of power of embargoR (Machi) v Legal Services Commission: CA (Lords Justice Simon Brown, Waller and Sedley): 20 December 2001The claimant was injured at work and his solicitors, having obtained a full legal aid certificate to sue his employers, reported to the commission that he had unreasonably refused the employers' offer of a settlement.

The commission wrote to the claimant, saying that no more work could be done under the certificate unless the commission first gave its approval.

Mr Justice Ouseley held that the commission had no power in law to place an embargo on the carrying out of work under the certificate pending its possible discharge.

The commission appealed.Jonathan Harvie QC and Andrew George (instructed by Legal Services Commission, Policy & Legal Department) for the commission; Philip Havers QC (instructed by Leigh Day & Co) for the claimant.Held, dismissing the appeal, that (Lord Justice Simon Brown dissenting) the judge was correct to conclude that the commission had no power of embargo on work to be done under a full legal aid certificate.

(WLR)Local governmentRoad traffic - proposed order for installation of pedestrian crossing - duty to give adequate public noticeR (Wainwright) v Richmond upon Thames London Borough Council: CA (Lords Justice Henry and Clarke and Mr Justice Wall): 20 December 2001The council, as the local traffic authority, proposed to install a signal controlled crossing over a road close to the claimant's home.It had a statutory duty to give public notice of the proposal.

Mailing of information for notification and consultation purposes was carried out by the council, putting one letter only through the external letterboxes of the local houses, many of which were divided into a number of flats.

In proceedings for judicial review, the judge, upholding the claimant's case that the council had failed to take reasonable steps to ensure local residents were properly notified and consulted, quashed the transport committee's decision approving the installation.

The council appealed.Natalie Lieven (instructed by R J M Mellow, Head of Legal Services, Richmond upon Thames); James Maurici (instructed by Rowe & Maw) for the claimant.Held, allowing the appeal, that section 23 of the Road Traffic Regulation Act 1984 required the council to give public notice of its proposal; that by not ensuring that one letter was delivered to each of the flats, the council had adopted a mailing procedure that failed to ensure that all persons who might be affected by the crossing were properly notified and was thus in breach of its statutory duty; but that since there was no real possibility that the council would have reached a different decision had the mailing been properly carried out the judge erred in exercising his discretion to quash the order.

Homeless persons - appeal to county court 'on any point of law' from decision of local authority on review - county court bound by authority's findings of factAdan v Newham London Borough Council (Secretary of State for Transport, Local Government and the Regions, interested party):CA (Lords Justice Brooke and Hale and Mr Justice David Steel): 14 December 2001A Dutch citizen and her three children came to England from the Netherlands.

Her application for housing under part VII of the Housing Act 1996 was declined on the ground that she was a foreign national in receipt of social security benefits from the Netherlands, without a permanent residence here.The local authority's appeal officer on reviewing her application concluded that there was no evidence that the applicant had planned to settle in the UK while remaining financially dependent on the Dutch authorities, and confirmed the authority's earlier decision.

On her appeal under section 204(1) of the Act, the county court held that there was ample evidence that she had planned to settle in the UK and directed the application to be reviewed by another appeal officer independently and impartially, in accordance with article 6 of the European Convention on Human Rights.

The authority appealed.Cherie Booth QC and Kerry Bretherton (instructed by the Head of Legal Services, Newham London Borough Council) for the local authority.

Nigel Pleming QC and Kate Markus (instructed by Eve Wee) for the applicant.

Mark Hoskins and Martin Chamberlain (instructed by Treasury Solicitor) for the secretary of state.Held, allowing the appeal, that the supervisory jurisdiction of the county court under section 204 was similar to the jurisdiction of the High Court on judicial review and, therefore, the judge's supervisory powers under section 204 on point of law did not extend to any point of facts; that it was for Parliament and not the courts to ensure that the section 204 procedure was compliant with fair trial requirements under article 6(1); and that, accordingly, the county court had not been entitled to overturn the appeal officer's finding of fact.PRACTICEInjunction - worldwide freezing order affecting assets held by third party bank outside jurisdiction - order to include proviso enabling third party to observe contractual and other obligations abroadBank of China v NBM LLC and others: CA (Lords Justice Pill, Tuckey and Jonathan Parker): 18 December 2001A worldwide freezing order in standard form was granted to the claimant and served on the interested party, a Swiss bank with an English subsidiary and a branch in London which had a historical relationship with the defendants.On the interested party's application, the order was varied to include a Baltic proviso that, in respect of assets outside the jurisdiction, nothing in the order prevented the interested party or its subsidiaries from complying with what it reasonably believed to be its obligations, contractual or otherwise, under the laws and obligations of the country or state in which those assets were situated or under the proper law of any bank account in question.

The claimant appealed.Sue Prevezer QC and David Scorey (instructed by Coudert Brothers) for the claimant; Thomas Keith (instructed by Simmons and Simmons) for the interested party.Held, dismissing the appeal, that the limit of the court's territorial jurisdiction and the principle of comity required that the effectiveness of freezing orders operating upon third parties holding assets abroad should normally derive only from their recognition and enforcement by the local courts; that third parties amenable to the English jurisdiction should be given all reasonable protection and should not be required to breach their contractual obligations; that the need to provide reasonable protection would usually entitle a third party to have the Baltic proviso added to a worldwide freezing order unless the court considered on the particular facts of the case that this was inappropriate; and that, since third parties were not represented when an order was first made, the Baltic proviso should be included in the standard form.RATINGRateable occupation - receivers appointed by debenture holder as company's agents running business at company's premises before and after liquidation - receivers not in rateable occupation of premises at any timeBoston Borough Council v Rees and another: CA (Lords Justice Pill and Jonathan Parker): 20 December 2001The receivers were appointed pursuant to a mortgage debenture which provided that any receiver appointed thereunder should be the agent of the company.Subsequently, the company went into liquidation.

Both before and after the commencement of liquidation, the receivers ran the company's business at their premises, a meat processing factory.

The council made demand on the receivers for payment of non-domestic rates, due under section 43(1) of the Local Government Finance Act 1988, in respect of the premises for the period between commencement of liquidation and the sale of the company's assets.

On the receivers' application under section 35 of the Insolvency Act 1986 for directions as to their liability for rates, Mr Justice Jacob found that they were not liable.

The council appealed.Robin Knowles QC and Lucy Frazer (instructed by Chattertons, Boston) for the council.

Gabriel Moss QC and Hilary Stonefrost (instructed by Eversheds, Birmingham) for the receivers.Held, dismissing the appeal, that the actions of a receiver and manager in managing the company's business did not, without more, amount to rateable occupation of the company's premises by him; that the actions of a receiver and manager as agent for the company could not found a claim of rateable occupation, since for rating purposes any occupation enjoyed by the receiver and manager as agent of the company was occupation by the company; that at all material times the company had remained in rateable occupation of the premises; and that the right analysis of the situation post-liquidation was not that the receivers were acting as the agents of the company, or the liquidators, but that they were not in rateable occupation at all.TAXATIONTax avoidance - knowledge-based contracts industry - legislation deeming company's remuneration to be salary lawfulR (Professional Contractors Group Ltd and Others) v Inland Revenue Commissioners: CA (Lords Justice Auld, Robert Walker and Dyson): 21 December 200The applicants represented individuals working in knowledge-based contract industries through one-man companies, working for clients who paid the companies directly.Legislation was introduced by section 60 of, and schedule 12 to, the Finance Act 2000 (known as IR35) to eliminate the practice by treating such remuneration as the contractor's salary, taxable under schedule E.Mr Justice Burton rejected the applicants' claim that the legislation was unlawful either under the Human Rights Act 1998 or under European Community law (see [2001] Gazette, 17 May, 44; [2001] STC 629).

The applicants appealed on the sole ground that IR35 was unlawful as being incompatible with EC law.

Gerald Barling QC and Kelyn Bacon (instructed by Bond Pearce) for the applicants.

Richard Plender QC and Stephen Morris (instructed by the Solicitor, Inland Revenue) for the Revenue.Held, dismissing the appeal, that IR 35 was a general measure to ensure that those supplying employee-like services pay tax and national insurance contributions under the system appropriate to employees and not to avoid it by the interposition of intermediaries; that the legislation was not discriminatory and did not inhibit the establishment of a business in the UK; and that, accordingly, the provisions in articles 87 and 88 of the EC Treaty relating to un-notified state aid and in articles 39, 43 and 49 relating to the hindrance of free movement of workers, freedom of establishment and the provision of services did not apply, with the consequence that the IR35 provisions to combat tax avoidance was not to be declared unlawful.TortCause of action - invasion of privacy - visitors strip- searched at prison: European Convention not introducing retrospective right Home Office v Wainwright and another: CA (Lord Chief Justice Woolf, Lords Justice Mummery and Buxton): 20 December 2001In 1997, the claimants were strip-searched for drugs on a prison visit.

The search, which caused distress and humiliation, did not comply with rule 86 of the Prison Rules 1964.

No drugs were found.The second claimant, aged 21, who was disabled, developed post-traumatic stress syndrome.

They claimed damages for trespass, and battery to the second claimant.

The judge concluded that a tort of trespass to the person, consisting of wilfully causing a person to do something to himself which infringed his right to privacy, had been committed against both claimants.

The tort of trespass to the person, consisting of wilfully causing a person to do something calculated to cause harm to him, namely infringing his legal right to personal safety, had also been committed against the second claimant.

The first claimant was awarded damages of 2,600 and the second 4,500.

The Home Office appealed against the finding of trespass but not battery.Robin Tam (instructed by the Treasury Solicitor) for the Home Office; David Wilby QC and Ashley Serr (instructed by David A Reston, York) for the claimants.Held, allowing the appeal, dismissing the first claimant's claim, reducing the second claimant's damages to 3,750 for battery and granting leave to appeal, that there was no common law tort of invasion of privacy; that the Human Rights Act 1998 could not change substantive law by introducing a retrospective right to privacy, and since the conduct complained of occurred before the Human Rights Act 1998 was implemented, section 3(1) did not apply retrospectively to introduce a right to privacy.

(WLR)See practice points, page 35