Law reports

COMMERCIAL

Reinsurance - reinsured's insurance business transferred pursuant to statutory sanction of court - court's sanction transferring reinsured's rights under reinsurance contracts without consent of reinsurers

WASA International (UK) Insurance Co Ltd and another v WASA International Insurance Co Ltd (Sweden): ChD (Mr Justice Park): 10 December 2002

The claimants applied for the court's sanction, under the Financial Services and Markets Act 2000, for the transfer of their insurance business to the defendants.

By section 112(1)(a) of the Act, if a court had made an order pursuant to the Act sanctioning the transfer of an insurance business, it could by that or any subsequent order make provision for the transfer of the whole or any part of the insurance company concerned.

By section 112(2)(a) an order made under subsection (1)(a) could transfer property or liabilities 'whether or not [the transferor] otherwise had the capacity to effect the transfer in question'.

The question arose whether, in the light of section 112(2)(a), a court's sanction was capable of transferring the benefit of reinsurance contracts held by the claimants without the consent of the reinsurers, even if, at common law, the claimants could not themselves have assigned the benefit without the reinsurers' consent.

Martin Moore QC (instructed by Clyde & Co) for the claimants.

Held, sanctioning the scheme, that, even if the claimants could not have transferred their rights under the reinsurance contracts without the consent of their reinsurers under common law, the 2000 Act and, in particular, the wide wording of section 112(2)(a), had the effect that the scheme, once sanctioned by the court pursuant to section 111, transferred those rights.

CRIMINAL

Health and safety - employer's duty to conduct undertaking to safeguard persons not in his employment - defence that not reasonably practicable to do so imposing legal burden of proof on defendant

R v Davies (David Janway): CA (Lord Justice Tuckey, Mr Justice Douglas Brown and Judge Gordon): 18 December 2002

The defendant ran a plant hire firm with a yard and workshop.

One afternoon, after telling G, a self-employed sub-contractor, to go home, the defendant instructed one of his employees, R, to park a JCB in the workshop.

R reversed the JCB with its lights flashing and crushed G between two vehicles, causing G fatal injuries.

The defendant was charged under sections 3(1) and 33(1) of the Health and Safety at Work etc Act 1974 with failing to comply with a duty to conduct his undertaking in such a way as to ensure, so far as reasonably practicable, that persons not in his employment who might be affected thereby were not exposed to risks to their health and safety.

The defence case was that he had done all that was reasonably practicable.

The trial judge ruled that that defence, in section 40 of the 1974 Act, was compatible with the European Convention on Human Rights, and therefore directed the jury that there was a legal burden on the defendant to prove that it had not been reasonably practicable for him to do more than he had in fact done.

The defendant was convicted.

He appealed against conviction on the grounds that section 40 was only compatible if it was read down so as to impose an evidential burden.

Wyn Williams QC and Bryan Thomas (instructed by Hutchinson Morris & LC Thomas, Neath) for the defendant; Oba Nsugbe QC and Bernard Thorogood (instructed by DLA Solicitors, Sheffield) for the Health and Safety Executive.

Held, dismissing the appeal, that although the defence in section 40 related to an ingredient of the offence created by sections 3 and 33, and therefore made some inroad into the presumption of innocence, it was not more than was necessary, justified and proportionate since the provision was regulatory rather than prescriptive and, accordingly, the imposition of a legal burden of proof in section 40 was not incompatible with the convention.

(WLR)

EMPLOYMENT

Employee suspended for four years pending dismissal - compensation awarded for unfair dismissal - subsequent common law claim for damages for psychiatric injury caused by suspension not automatically excluded

McCabe v Cornwall County Council and another: CA (Lords Justices Auld, Brooke and Sedley): 19 December 2002

The claimant was employed as a teacher by the defendants.

In May 1993, some girl pupils complained that he had acted in a sexually inappropriate manner towards them.

He was first suspended from his post and then, four months later, given reasons.

He claimed that in the interim he had then begun to develop psychiatric problems.

He remained suspended for four years, being dismissed only in 1996.

He won statutory compensation for unfair dismissal.

In March 1997, the claimant brought an action for damages in contract and tort for psychiatric illness caused by the way in which the disciplinary process had been conducted.

The judge struck out his claim on the basis that, although the claimant might have been entitled to recover at common law had there been no dismissal, the fact of dismissal excluded a claim at common law.

The claimant appealed.

Satinder Gill (instructed by Elliotts, Bristol) for the claimant; Richard Mawhinney (instructed by Hancock Caffin, Truro) for the defendants.

Held, allowing the appeal, that though there was no overlap between the statutory unfair dismissal jurisdiction and the common law jurisdiction, the dividing line fell to be determined case by case; that the question was not just one of the length of the disciplinary process eventually giving rise to dismissal and there might be many other relevant factors; that whether investigation and suspension were 'part of the procedure' of dismissal, so as to exclude them as a basis for a common law action was a matter of feel on the particular facts of the case; and that, on the facts, the claim should be allowed to proceed to trial.

HUMAN RIGHTS

Freedom of religion - parents' religious belief in school corporal punishment - ban on such punishment not interfering with freedom to manifest religion

R (Williamson and others) v Secretary of State for Education and Employment: CA (Lords Justices Buxton and Rix and Lady Justice Arden): 12 December 2002

The 12 claimants, all teachers or parents of pupils at independent schools that provided a Christian education based on biblical observance, sought judicial review by way of a declaration that section 548 of the Education Act 1996, as substituted by section 131(1) of the School Standards and Framework Act 1998, which banned corporal punishment in all schools, did not prevent a parent delegating to a teacher in an independent school the right to administer corporal punishment.

The claim was dismissed by Mr Justice Elias.

The claimants appealed, arguing, among other things, that section 548 interfered with their freedom to manifest their religion in accordance with article 9 of the European Convention on Human Rights.

Paul Diamond and Bruno Quintavalle (instructed by Windsor & Co) for the claimants; Hugo Keith (instructed by the Treasury Solicitor) for the Secretary of State.

Held, dismissing the appeal, (per Lord Justice Rix and Lady Justice Arden) that, although a complete ban on corporal punishment would interfere with the manifestation of the claimants' religious beliefs and would have to be justified under article 9(2) (a question with which the court had not been concerned), section 548 had not materially interfered with a Christian scheme of corporal punishment in school, when the actual application of the punishment could be performed by the parents themselves, either at school or in the home; (per Lord Justice Buxton) that neither the teachers, in inflicting corporal punishment, nor the parents, in supporting its infliction within the school, would be manifesting their beliefs in the sense of that expression in article 9(1), and so article 9(1) was not engaged (WLR).

IMMIGRATION

Asylum application made in UK while first application made in Germany under consideration - Germany accepting responsibility for determining application - Home Secretary entitled to order return to Germany

R (Lika) v Secretary of State for the Home Department: CA (Lord Justice Latham and Mr Justice Lawrence Collins): 16 December 2002

The claimant, having first applied for asylum in Germany, entered the UK illegally and applied for asylum, stating that he feared for his safety in Germany.

The secretary of state, having been informed by the German authorities that they were considering his application, decided that Germany was the state responsible to consider his application under article 8 of the Dublin Convention, refused the application and ordered his return to Germany.

The claimant sought judicial review of the secretary of state's decision, which was refused.

The claimant appealed on the ground that Germany was not required by article 10 to take responsibility for the claimant and so the secretary of state had misdirected himself; and that the claimant had a legitimate expectation that he would be dealt with in accordance with the convention.

Manjit Singh Gill QC and Christopher Jacobs (instructed by the Joint Council for the Welfare of Immigrants) for the claimant; Lisa Giovannetti (instructed by the Treasury Solicitor) for the secretary of state.

Held, dismissing the appeal, that the convention did not provide rights to individual asylum seekers and gave rise to no legitimate expectation on which the claimant could rely; that section 2 of the Immigration and Asylum Act 1996 and the secretary of state's published policy, in accordance with which the claimant had been treated, would override any such expectation; that the claimant's application to Germany was clearly one to which article 8 applied; that whether the German authorities considered that article 10 in some way absolved them from any obligation to deal with the claimant in accordance with that article was a matter for them, not justiciable in the English courts; and that, in the context of a decision as to whether the application should be considered by Germany, the secretary of state had been entitled to conclude that the material was insufficient to justify taking the exceptional course of departing from the procedure envisaged by the convention.

LANDLORD AND TENANT

Landlord serving repair notice on mortgagee in possession - mortgagee's counter-notice not effective - landlord entitled to bring forfeiture proceedings without court's permission

Smith v Spaul: CA (Lord Justice Kay and Lady Justice Arden): 16 December 2002

The claimant lessor served a repairing notice under section 146 of the Law of Property Act 1925 on the then lessee's mortgagee who was in possession of the leased premises.

The mortgagee in possession purported to serve a counter-notice, which, if effective, required the claimant to obtain the court's permission, under section 1 of the Leasehold Property (Repairs) Act 1938, before commencing proceedings for breach of the repairing covenant.

The mortgagee subsequently sold the flat to the defendant.

The claimant, without the court's permission, issued proceedings against the defendant for possession for breach of the repairing covenant on the basis of the section 146 notice.

The judge struck out the proceedings, holding that the mortgagee was entitled to issue the counter-notice and that the claimant should have obtained the court's permission before issuing the proceedings.

The claimant appealed.

Josephine Henderson (assigned by the Bar Pro Bono Unit) for the claimant; Richard Alomo (instructed by D A Cummings-John) for the defendant.

Held, allowing the appeal, that a mortgagee in possession of leased premises was not a 'lessee' for the purposes of section 146 of the Law of Property Act 1925; that, accordingly, the mortgagee was not entitled to serve a counter-notice under section 1 of the 1938 Act; that the claimant was not obliged to serve the section 146 notice on the defendant, who had not then taken an assignment of the lease; and that the proceedings had been properly brought.

(WLR)

NAVIGATION

Public rights of navigation - claimant seeking declaration that extinguished - no extinguishment save by statute

Rowland v Environment Agency; ChD (Mr Justice Lightman); 19 December 2002

The claimant owned one bank, parts of the other bank and the river bed of Hedsor Water, a section of the Thames.

She sought a declaration that the public rights of navigation over Hedsor Water had been extinguished.

Lord Lester of Herne Hill QC and Robert Howe (instructed by CMS Cameron McKenna) for the claimant; Peter Village QC and Lisa Busch (instructed by Clarks, Reading) for the defendant; David Elvin QC and Timothy Morshead (instructed by the Treasury Solicitor) as advocates to the court.

Held, refusing to make a declaration in the claimant's favour, that public rights of navigation could only be extinguished by legislation, by the exercise of statutory powers or by destruction of the subject matter; that there was no express or implied statutory authority or power to extinguish public navigation rights over Hedsor Water and they had not been extinguished under section 2 of the Thames Preservation Act 1885 in the 20 years prior to 1885, since nothing in that Act could be construed as giving any riparian owner any right that he did not possess prior to the passing of the Act and any pre-existing rights of navigation could not be restricted; that, furthermore, section 5 of the Thames Preservation Act 1885 could not be construed so as to entitle a riparian owner to interfere with the exercise of a public right of navigation which pre-dated the 1885 Act; that finally the claimant could not have had a legitimate expectation that the public rights of navigation were extinguished since the defendant could not, by law, have made representations giving rise to such an expectation and the claimant had in any event not made out the necessary expectation, even had she done so it would not have constituted an abuse of its power for the defendant to resile from it; that that was so even though under article 1 of the first protocol to the European Convention on Human Rights a legitimate expectation that navigation rights were extinguished, which was the product of an ultra vires promise, could be afforded a measure of protection as a possession.

PRACTICE

Arbitration - appeal from arbitrator's decision - permission to appeal not to be given where point not substantially affecting parties' rights or academic

CMA CGM SA v Beteiligungs-Kommanditgesellschaft MS 'Northern Pioneer' Schiffahrtsgesellschaft mbH & Co: CA (Lord Phillips of Worth Matravers Master of the Rolls, Lords Justice Rix and Dyson): 18 December 2002

The claimants in the arbitration were the owners of vessels which sailed under the German flag.

The charters contained a war cancellation clause.

In March 1999, a military operation began in Kosovo.

Germany participated as a NATO member.

The charterers purported to invoke the war cancellation clauses to terminate the charters on 29 April 1999.

The arbitrators found the cancellation to be invalid because the events in Kosovo did not constitute a war but, if they did, Germany was not involved within the clause, and that, in any event, the right to cancel had to be exercised within a reasonable time of the event, and it had not been.

The charterers' application for permission to appeal under section 69 of the Arbitration Act 1996 was refused.

The charterers appealed pursuant to the permission the judge.

Philippa Hopkins (instructed by Ince & Co) for the charterers; Stephen Kenny (instructed by Holman Fenwick & Willan ) for the owners.

Held, dismissing the appeal, that the criteria in section 69 of the 1996 Act permitted a judge to grant permission to appeal from arbitrators on a point of law of general public importance where the arbitrators' decision was open to serious doubt; that, although there was a serious doubt as to whether the juridical basis of the requirement to exercise a right to withdraw from a charter within a reasonable time was an implied term or based on election, waiver or estoppel, that did not impact on the arbitrators' decision and so it did not substantially affect the rights of the parties nor was it of general public importance; that the arbitrators' decision on the war cancellation clause was open to serious doubt, but since the right to cancel had been exercised too late it was academic; and that, accordingly, the judge had correctly refused permission under section 69.

REVENUE

Self-assessment - inspector justifying income tax adjustment after deadline date on grounds that error in tax return could not reasonably be discovered at that date - assessment of reasonableness not limited to information which could be inferred solely from return and accompanying documents

Langham (Inspector of Taxes) v Veltema: ChD (Mr Justice Park): 10 December 2002

An inspector of taxes adjusted a taxpayer's self-assessment tax return after the usual deadline date for adjustments had passed.

The inspector justified the alteration on the grounds that the case fell within section 29(5) of the Taxes Management Act 1970 as substituted by sections 191 and 199 of the Finance Act 1994, which provided an extension to the usual deadline where the inspector could not have reasonably been expected, on the basis of the information made available to him before the deadline date, to be aware that the return had incorrectly assessed the amount of tax payable.

General commissioners allowed the taxpayer's appeal.

The inspector appealed.

Ingrid Simler (instructed by Solicitor, Inland Revenue) for the revenue; Michael Sherry (instructed by M & S Solicitors, Leicester) for the taxpayer.

Held, dismissing the appeal, that the words of section 29(5) did not limit the sources of information which the inspector was assumed to have to what was in the tax return and accompanying documentation to the exclusion of anything else which he could reasonably be expected to have known or found out and which were readily available to him; that while it might have been true that he could not have inferred, on the present facts, that the return was insufficient solely on the basis of the return and the accompanying documentation, he had had plenty of time to take the few simple steps which would have led him to conclude that the self-assessment was insufficient and it was reasonable to expect him to have taken those steps.

Taxpayer company entering into transaction - object of transaction including obtaining of capital allowances - company entitled to capital allowances

Barclays Mercantile Business Finance Ltd v Mawson (Inspector of Taxes): CA (Lords Justice Peter Gibson, Rix and Carnwath): 13 December 2002

The taxpayer company's trade was that of providing asset-based finance.

It entered into a transaction which comprised the acquisition of a pipeline, its lease-back and a sub-lease.

Viewed on its own, that would have attracted capital allowances under section 24(1) of the Capital Allowances Act 1990.

Mr Justice Park, dismissing the company's appeal from special commissioners, held that the transaction should have been seen as part of a wider scheme and that, so seen, it had been effected solely to gain a tax advantage; for fiscal purposes nothing had happened and therefore it did not attract capital allowances.

The taxpayer company appealed.

Graham Aaronson QC and Camilla Bingham (instructed by Denton Wilde Sapte) for the taxpayer company; David Goy QC and David Ewart (instructed by the Solicitor, Inland Revenue) for the revenue.

Held, allowing the appeal, that, provided that a taxpayer's expenditure was incurred on the provision of plant or machinery and was so incurred wholly and exclusively for the purposes of the trader's trade, subject to section 75(1) of the 1990 Act, it was irrelevant to the operation of section 24(1) of that Act whether the object was or included the obtaining of capital allowances; that the concept of incurring expenditure on the provision of an asset, as provided by section 24(1) of the 1990 Act, was a legal one and so the approach laid down in W T Ramsay Ltd v Inland Revenue Commissioners [1982] AC 300 did not apply; that, in any event, the transaction was a genuine trading transaction; and that, accordingly, the transaction attracted capital allowances.

TORT

Mentally handicapped patient giving birth to healthy child - pregnancy resulting from health authority's negligence - costs of maintaining and educating child not recoverable in damages

D v East Kent Community NHS Trust: CA (Lords Justices Judge and Longmore and Mr Justice Sullivan): 17 December 2002

The claimant, a severely mentally handicapped single young woman, was admitted to a mixed psychiatric ward in the defendant health authority's hospital, and became pregnant after having sexual intercourse with an unidentified male patient.

The claimant chose not to have the pregnancy terminated, with the result that she gave birth to a healthy baby girl.

The claimant's mother took over the responsibility of rearing the child.

In an action against the defendant for negligence in admitting the claimant to a mixed ward and failing to sterilise her or otherwise prevent her from becoming pregnant, the claimant claimed damages, representing the costs of raising, maintaining and educating the child.

On a preliminary issue, the judge held that the claimant was not entitled to damages in respect of those costs.

The claimant appealed.

Nicholas Yell (instructed by Dominic Goward and Co, Canterbury) for the claimant; Robert Francis QC and Bridget Dolan (instructed by Brachers, Maidstone) for the defendant.

Held, dismissing the appeal, that, while a mother who had lost her ability to earn a living as a result of giving up her work to care for her child who had been injured by the negligence of the defendant could recover that loss in damages, a mother who was staying at home to care for her healthy child was not entitled to recover damages for lost earnings; that the claimant could not establish any personal loss to her in raising her healthy child whose care had been personally undertaken by the child's grandmother; and that the grandmother had no cause of action of her own against the defendant.