Law reports

Law reports

COMPANY

Member leaving quasi-partnership company - petition for order requiring remaining members to purchase leaving member's share at undiscounted value - not to be granted absent contractual obligation

Larvin v Phoenix Office Supplies Ltd and others: CA (Lords Justice Auld, Clarke and Jonathan Parker): 26 November 2002

The petitioner had, since 1995, held a one-third share in a quasi-partnership company directed by himself and two others, each of whom held a one-third share.

There had been discussion in 1995 about a possible put-option, whereby a member who left could require the others to buy out his share of the company's asset value.

However, no contract had resulted from the discussion.

When the petitioner left in 2000, he asked the others to buy him out on those terms.

They responded by offering 33,000 for his share.

The judge ordered the two remaining members to pay 290,000 for the petitioner's share.

The company and the remaining members of the quasi-partnership company appealed.

Grant Crawford (instructed by Irwin Mitchell, Sheffield) for the company and the remaining members; Edward Bartley Jones QC (instructed by Wacks Caller, Manchester) for the petitioner.

Held, allowing the appeal, that section 459 of the Companies Act 1985 protected company members from breach of terms on which they had agreed that the company's affairs should be conducted, and against some inequity making it unfair for those conducting the company's affairs to rely on their strict legal power; that it protected members in their capacity as members and not as directors or employees; but that to entitle a member of a quasi-partnership company to a 'no-fault divorce' more was required than section 459 alone; that the section could not elevate something that was not a binding contract into a binding obligation; and that, accordingly, the judge had been wrong to make the order in favour of the petitioner.

CRIMINAL

Mandatory life sentences for murder - defendants unlikely to constitute public danger if released - sentences not arbitrary, excessive or disproportionate so as to breach convention rights

R (Lichniak) v Secretary of State for the Home Department; R (Pyrah) v Same; R v Lichniak; R v Pyrah: HL (Lord Bingham of Cornhill, Lord Nicholls of Birkenhead, Lord Steyn, Lord Hutton, Lord Hobhouse of Woodborough, Lord Scott of Foscote and Lord Rodger of Earlsferry): 25 November 2002

On conviction of murder the defendants received mandatory sentences of life imprisonment under section 1(1) of the Murder (Abolition of Death Penalty) Act 1965.

The trial judge assessed each defendant as unlikely, if released, to pose a danger to public safety.

The defendants sought judicial review, and applied for leave to appeal against sentence, on the grounds that their sentences were arbitrary, excessive and disproportionate contrary to articles 3 and 5 of the European Convention on Human Rights.

The Court of Appeal (Criminal Division) sitting also as a Queen's Bench Divisional Court [2002] QB 296 found it unnecessary to consider the judicial review applications, granted leave to appeal but dismissed the appeals.

The defendants appealed.

Edward Fitzgerald QC and Phillippa Kaufmann (instructed by Irwin Mitchell, Sheffield) for the defendants; David Pannick QC and Mark Shaw QC (instructed by the Treasury Solicitor) for the home secretary.

Held, dismissing the appeals, that a degree of deference was to be accorded to Parliament's settled will to retain the mandatory life penalty for murder in section 1(1) of the 1965 Act; that since the defendants' tariff, served as the punitive element, reflected the judicial recommendation and the factual circumstances neither had been sentenced to arbitrary imprisonment; that although their release dates were uncertain after the tariff expired and any release would be on lifelong licence, subject indefinitely to liability to recall, the parole board's role in evaluating risk prior to release and assessing the propriety of any recall was defensible, and in any event susceptible of challenge; and that, accordingly, the defendants' complaints were insufficiently severe to engage either article 3 or article 5.

(WLR)

Unauthorised use of trade mark - defence - legal burden of proof on defendant not incompatible with convention right to presumption of innocence

R v S: CA (Lord Justice Rose, Mr Justice Hughes and Mr Justice Davis): 20 November 2002

The defendant was a sole trader who operated a warehouse selling clothing, sportswear and footwear bearing well-known brand names.

He was charged with two counts of unauthorised use of a trade mark, contrary to section 92(1) of the Trade Marks Act 1994.

At a preparatory hearing, the defendant raised the preliminary questions whether the defence in section 92(5) of the 1994 Act imposed a legal, rather than a merely evidential, burden on the defendant, and if so, whether that reverse burden was incompatible with article 6(2) of the European Convention on Human Rights.

The judge answered the first question in the affirmative and the second in the negative.

The defendant, by leave of the judge, appealed against both parts of that ruling.

Bernard Tetlow (instructed by Kenneth Elliott & Rowe) for the defendant; Lionel Swift QC and Nick Ham for the prosecutor.

Held, dismissing the appeal, that section 92(5) did impose a legal burden on the defendant; that the imposition of that reverse legal burden was necessary and justified in view of the purpose of the legislation and the mischief at which it was aimed; that it was defined within reasonable limits and was proportionate, a proper balance being struck between the interests of the public and the interests of the accused; and that, accordingly, it was compatible with the convention and was not to be read down.

Criminal Cases Review Commission referring case on two grounds - defendant seeking to rely on additional grounds of appeal - statute conferring right to do so

R v Smith (Wallace Duncan) (No 3): CA (Lord Justice Buxton, Mr Justice Holman and Mr Justice Astill): 28 November 2002

The defendant was convicted in 1994 of one count of fraudulent trading and two counts of obtaining property by deception.

His appeal against conviction was dismissed [1995] Gazette, 6 December, 31.

The Criminal Cases Review Commission referred his case back to the Court of Appeal (Criminal Division) on grounds relating to the use at trial of various interviews which had been conducted under statutory powers and the impact on his conviction of R v Preddy [1996] AC 815.

At a directions hearing the defendant contended that, in accordance with section 14(5) of the Criminal Appeal Act 1995, it was open to him to take any ground of appeal that arose from the original trial whether or not it was a basis upon which the commission had referred the matter.

The Crown submitted that it should be open to the Court of Appeal to exclude grounds of appeal with little prospect of success in the same way as the single judge could under section 31 of the Criminal Appeal Act 1968.

Douglas Day QC (instructed by Decherts) for the defendant; Timothy Barnes QC (instructed by the Director of the Serious Fraud Office) for the Crown.

Held, that the Court of Appeal had tried repeatedly to ensure that expensive public time for hearings was not occupied on matters which had no reasonable prospect of success, section 14(5) of the 1995 Act in terms provided that once a reference had been made to the Court of Appeal, on whatever grounds, there was nothing to prevent a party from adding any further grounds which he thought appropriate.

DISCRIMINATION

Constable alleging institutional and continuing acts of discrimination by fellow officers - jurisdiction to hear complaint of act extending over period - need for appropriate focus by tribunals and parties' representatives

Commissioner of Police of the Metropolis v Hendricks: CA (Lords Justice Judge, Mummery and May): 27 November 2002

In March 2000, the applicant, a black female police constable, presented an originating application to the employment tribunal complaining of racial and sexual discrimination and harassment over a period of 11 years.

In July 2000, she presented a second application alleging victimisation following her first application, including a decision by the police force to reduce her pay from full pay to nil.

The commissioner contended that the tribunal had no jurisdiction to hear the first application, it having been made after the expiry of the statutory three-month time limit.

The employment tribunal held that it had jurisdiction to hear the application on the basis of alleged continued acts.

The Employment Appeal Tribunal allowed the commissioner's appeal, holding that the tribunal had failed to address correctly the question of what constituted the 'continued act' upon which the applicant relied.

The applicant appealed.

Robin Allen QC and Jason Galbraith-Marten (instructed by Schillings) for the applicant; John Cavanagh QC and Louise Chudleigh (instructed by the Metropolitan Police Solicitors' Department) for the commissioner.

Held, allowing the appeal, that on the evidence before it the employment tribunal had been entitled to make a preliminary decision that it had jurisdiction to consider the allegations which included less favourable treatment in the course of the applicant's continuing relationship with the police service, leaving her to prove that the numerous alleged incidents were linked to one another and that they were evidence of a continuing discriminatory state of affairs covered by the concept of 'an act extending over a period'; that, where the alleged acts of discrimination extended over a long period of time, the tribunal should focus on the substance of the complaint that the commissioner was responsible; and that in such cases the parties' legal representatives should direct their attention on the most serious and recent allegations to formulate the issues.

EMPLOYMENT

Claimant employed as nurse developing allergy to latex after using gloves - claimant supplied with vinyl gloves but having anaphylactic reaction after handling box used for latex gloves - employer under absolute duty to prevent exposure to latex as hazardous substance

Dugmore v Swansea NHS Trust and another: CA (Lords Justice Tuckey and Hale and Sir Denis Henry): 21 November 2002

The claimant, who is atopic, was employed as a nurse at two hospitals in Swansea.

At the first she developed a type 1 allergy to latex protein as a result of using powdered latex gloves.

Following a serious reaction, she was supplied with vinyl gloves.

On her move to the second hospital she told the employer of her allergy and was given vinyl gloves.

She suffered an anaphylactic attack when picking up an empty box used for latex gloves and was not able to return to work.

She claimed damages for negligence and breach of statutory duty.

The judge dismissed the claim.

She appealed.

Philip Marshall (instructed by Thompsons) for the claimant; Stephen Shaw (instructed by Morgan Lewis Mayers, Cardiff) for the defendants.

Held, allowing the appeal in part, that regulation 7(1) of the Control of Substances Hazardous to Health Regulations 1999 imposed an absolute duty on an employer to ensure that exposure to a hazardous substance was prevented or controlled; that the defence of reasonable practicability qualified only the duty of total prevention; that where prevention was not reasonably practicable, the secondary duty was adequately to control the exposure; that the regulations involved positive obligations to seek out the risks and take precautions against them and it was not incompatible with their purpose that an employer who failed to discover a risk or rated it so low that he took no precautions against it should nevertheless be liable to the employee who suffered as a result; and that, accordingly, since the first employer had breached the regulations it was liable to the claimant, but because it was impossible to say that any breach by the second employer was causative of the anaphylactic attack it was not liable.

LANDLORD AND TENANT

Tenant using premises for drug dealing - landlord seeking possession order - court entitled to suspend possession order

Stonebridge Housing Action Trust v Gabbidon and another: ChD (Mr Justice Lloyd): 21 November 2002

The landlord sought an order for possession of its flat on the grounds of rent arrears and that the second defendant, Vanetta Gabbidon, had allowed it to be used for drug dealing (at a time when the first defendant, Rodney Gabbidon, was not present).

The judge in the county court made an order for possession suspended on terms against the second defendant, the first defendant having vacated the property.

The landlord appealed on the ground that, since the property had been used for a serious criminal offence and there were no special circumstances in the second defendant's favour, the judge ought not to have suspended the possession order.

Bryan McGuire (instructed by Solicitor, Brent London Borough Council, Wembley) for the landlord; Philip Dixon (instructed by Powell Spencer & Partners) for the tenant.

Held, dismissing the appeal, that when considering making a possession order the court had to consider whether the grounds for possession were proven, whether it was reasonable to make an order and whether the court should exercise its discretion; that, although where premises had been used for a serious criminal offence it would only be in exceptional cases that the court would not make an order for possession, it could nevertheless be appropriate to suspend an order in those circumstances; that a judge, in the exercise of his discretion, was not therefore compelled to refuse to suspend an order for possession where a serious criminal offence had been committed; and that, since the drug incidents were therefore not conclusive in favour of immediate possession and since the judge below had decided to suspend the order after referring to all the relevant factors, there had been no error of law or misdirection.

PARTNERSHIP

Partners' conduct to co-partner amounting to repudiatory breach of agreement - innocent partner purporting to accept breach - accepted repudiation not bringing partnership to an end

Mullins v Laughton and others: ChD (Mr Justice Neuberger): 19 December 2002

The claimant sought the dissolution of the partnership he had entered into with the defendants on the ground that their conduct amounted to a repudiatory breach of the partnership agreement which he had accepted.

Anthony Mann QC and Martha Maher (instructed by Bond Pearce, Plymouth) for the claimant; Andrew De La Rosa (instructed by Gateley Wareing, Birmingham) for the defendants.

Held, dissolving the partnership, that the question of whether a partnership could be dissolved by an accepted repudiation was considered by Lord Millett in Hurst v Bryk [2002] 1 AC 185, 193; that while he had expressly left the point open, he plainly favoured the view that dissolution of a partnership by an accepted repudiation was not possible; that since that provisional view followed thorough and careful analysis and was consistent with the weight of authority, it should prevail; and that accordingly, the doctrine of repudiatory breach did not apply to partnership agreements as it applied to other contracts; that the conduct of the defendants did justify the dissolution of the partnership under section 35(d) and (f) of the Partnership Act 1890; but that, in the circumstances, it was not appropriate to wind up the partnership.

PRACTICE

Petitioners in insolvency proceedings seeking orders for disclosure of documents and cross-examination of witnesses - automatic disclosure provisions not applying - no exceptional circumstances to justify making orders

Highberry Ltd and another v Colt Telecom Group plc: ChD (Mr Justice Lawrence Collins): 25 November 2002

The petitioners held approximately 75 million face value of notes issued by a public limited company.

Although the company was a constituent member of the FTSE mid-250 index, with its latest balance sheet showing assets of 977 million, the petitioners sought an administration order on the ground that the company was, or was likely to become, insolvent.

The petitioners applied for disclosure of documents and directions for cross-examination of witnesses, on the basis that at the petition hearing there would be a dispute as to solvency.

Malcom Davis-White (instructed by Cadwalader) for the petitioners; Richard Sheldon QC and Hilary Stonefrost (instructed by Slaughter & May) for the company.

Held, refusing the application, that although the hearing of insolvency proceedings, which included administration petitions, was normally dealt with on the basis of written evidence, the court had power to order disclosure of documents and information and to give directions on cross-examination of witnesses under rules 7.7 and 7.60 of the Insolvency Rules 1986; that such an order should only be made in exceptional circumstances; that rule 7.5(1) of the 1986 rules applied the Civil Procedure Rules 1998 (CPR) to insolvency proceedings only in so far as they were consistent with the 1986 rules and, therefore, incorporated the overriding objective in CPR, rule 1.1 but not the CPR's provisions for automatic disclosure, which were inconsistent with the 1986 rules; that, accordingly the automatic disclosure provisions did not govern the application; and that, there being no exceptional circumstances, no order for disclosure or cross-examination was to be made.

TORT

Libel - defendant's offer of amends rejected - claimant seeking to undermine statutory defence required to plead identity of individual whose knowledge gave reasonable grounds for believing statement false and facts relied on

Milne v Express Newspapers: QBD (Mr Justice Eady): 29 November 2002

In the course of a libel action, the claimant rejected the defendant's unqualified offer to make amends made under section 2 of the Defamation Act 1996, thereby affording the defendant a defence under section 4(2) of the 1996 Act unless it could be shown, under section 4(3) of the 1996 Act, that the defendant 'knew or had reason to believe' at the time of publication that the statement complained of was false.

The defendant applied to strike out the paragraphs of the reply which sought so to undermine that defence on grounds that neither the identity of any knowledgeable individuals nor the facts purported to have been known were specified.

The claimant resisted the application on the basis that such information could be established further to disclosure of documents and exchange of witness statements.

James Price QC and William Bennett (instructed by Andrew Milne) for the claimant; Geoffrey Shaw QC and Caroline Addy (instructed by Davenport Lyons) for the defendant.

Held, granting the application, that the phrase 'knew or had reason to believe' required the claimant to establish actual rather than constructive knowledge and bad faith, not mere negligence; that the claimant had firstly to demonstrate that an identified individual responsible for the article in question knew of a relevant fact or facts, and secondly to show objectively that such knowledge provided reasonable grounds to believe positively that the words complained of were false; and that the claimant could not, as a matter of general principle, be permitted to enter a pleading on a purely formulaic basis in the in the hope that something further might be 'fished' up in the course of disclosure.

TRADE

Patent infringement - host computer of interactive gaming system located outside UK - no defence where system accessed from terminal in UK

Menashe Business Mercantile Ltd and another v William Hill Organisation Ltd: CA (Lords Justice Aldous and Dyson and Sir Denis Henry): 28 November 2002

The patent holder, which held a patent for an invention entitled 'interactive, computerised gaming system with remote control', commenced proceedings for infringement of the patent.

The infringer admitted that a subsidiary was operating the gaming system alleged to infringe, but asserted that, since the host computer was outside the UK, there was no infringement of the patent.

Mr Justice Jacob [2002] 3 All ER 597 held that there was infringement.

The infringer appealed.

Richard Arnold QC and Benet Brandreth for the infringer; Peter Prescott QC and Lindsay Lane for the patent holders.

Held, dismissing the appeal, that it would be wrong to apply the old ideas of location to inventions of the type under consideration; that where a host computer was situated in Antigua and the terminal computer was in the UK, the pertinent question was who had used the claimed gaming system; that since the answer was the 'punter' who used his terminal in the UK it was not a misuse of language to say that he 'used' the host computer in the UK; that it was the input to and the output from the host computer which was important to the punter and in a real sense the punter used the host computer in the UK; and that the supply of a CD in the UK to the UK punter was intended to put the invention into effect in the UK.

(WLR)

Application to register trade mark - opponent seeking permission to raise unpleaded point - discretion to be exercised in favour of allowing new point to be argued provided no need for significant adjournment

E I Du Pont de Nemours and Co v S T Dupont (No 2): ChD (Mr Justice Neuberger): 22 November 2002

At a hearing in Trade Marks Registry, the opponents to an application for the registration of a mark applied to advance an argument which had not been pleaded.

The hearing officer refused that application and went on to confirm the registration of the mark.

The opponents appealed on the ground, among other things, that the hearing officer's refusal to allow it to argue the new point was wrong.

Richard Arnold QC (instructed by Briffa) for the opponent; James Mellor (instructed by Blair & Co) for the applicant.

Held, allowing the appeal, that in the absence of special factors, if there was no need for any significant adjournment justice would normally indicate that the discretion be exercised in favour of permitting the point to be argued; that that was particularly true on applications for the registration of a trade mark since the public interest was engaged; and that, in the circumstances, there was no reason for refusing to allow the opponents to raise the unpleaded point.