Cases

Question 1

Halsey

Answer 1

1. Compelling ADR would be an unacceptable constraint on the right to access to the court - violating Art.6 ECHR
2. The general rule that costs follow the event should not be departed from unless it is shown that the successful party acted unreasonably in refusing to agree to ADR.
3. The court identifies a non-exhaustive list of factors that should be considered in determining whether a refusal to engage in ADR was reasonable: (1) the nature of the dispute; (2) the merits of the case; (3) the extent to which other settlement methods have been attempted whether the costs of the ADR process would be disproportionately high; (4) whether any delay in setting up and attending ADR would have been prejudicial; (5) whether the ADR process had a reasonable prospect of success.

Question 2

Sanderson and Bullock

Answer 2

Cases that set out special kinds of costs orders: If C sues two (or more) defendants, but is only successful against one of them (or several, but not all), the unsuccessful defendant can be made liable for the costs that C would (upon application of the general principle) usually owe to the successful defendant. The unsuccessful defendant can be made liable either directly (as a Sanderson oder) or indirectly (a Bullock order).

• Sanderson order = the unsuccessful defendant is ordered to pay the costs of the successful defendant directly
• Bullock order = C can recover the costs that C has to pay to the successful defendant from the unsuccessful defendant, as part of the costs that the unsuccessful defendant has to pay to C anyway

When will such orders be made?

• No general rule - entirely within the court’s discretion to decide whether any such order, and if so which one, should be made
• Dominant consideration = whether it was reasonable to join the successful defendant
• If it was unreasonable = C cannot get either a Sanderson or a Bullock order
• If it was reasonable = C may be entitled to such an order, but not automatically
• Factors to consider (none of them are conclusive): (i) whether the claims against D1 and D2 were in the alternative; (ii) whether the causes of action relied on against D1 and D2 were connected; (iii) did one D blame the other?; (iv) did the unsuccessful defendant do something to cause the joinder of the successful defendant?

Question 3

Denton

Answer 3

In determining whether the court should grant relief from a sanction, it should apply a three-stage test:

1. Consider the seriousness and significance of the breach

• If the breach is not sufficiently serious, the court will probably not have to consider (2) and (3) in much detail or at all -> relief will usually be granted
• Often the most useful yardstick is to consider whether the breach imperilled the hearing date
• But some breaches are sufficiently serious even if they don’t have this effect: e.g. failure to pay court fees
• At this stage the focus should be on the specific breach, rather than the applicants conduct in the litigation in general. But obviously where the breach is that of an ‘unless order’ it is important to look at the underlying order to assess seriousness.
• Where applications for relief from sanctions are made in respect of two separate sanctions the court should consider each breach separately at the first stage but should consider both of them together at the third stage.

2. Why did the default occur?

• No examples given in Denton, but from other cases: (i) the party’s solicitor was seriously ill or involved in an accident; (ii) later development of litigation means that the original time limit for compliance became unreasonable (but was reasonable when made and so could not be altered by way of application/appeal at the time); (iii) failure to deliver a document caused by difficulties in getting the signature of a third party; (iv) key witness was pre-occupied with visiting very ill wife in hospital; (v) failure to issue new claim form on time because although it was given to the court in good time, the court failed to issue it for 9 days.
• In general, a good reason will be outside the control of the defaulting party
• If there is a good reason, the court will usually grant relief from the sanction

3. evaluate all the circumstances of the case

• It is WRONG to assume that just because there is a serious and significant breach for which there is no good reason the relief applied for will be denied. The court still has to consider ALL the circumstances and there are cases where relief is granted at the third stage.
• Obviously you have to consider the factors expressly mentioned in r. 3.9 ((a) need to conduct litigation efficiently and at proportionate cost, (b) enforce compliance with orders, rules and IDs).
• Very important to consider the promptness of the application for relief - in many cases this has been determinative
• Other factors mentioned in case: the track record of compliance of the defaulting party, other past and current breaches.

The court also gave guidance on the conduct it expected of other parties to the litigation:

• It is wholly inappropriate for a party to seek to obtain an advantage from the other party’s breach by unreasonably opposing the application for relief from sanctions
• The parties should be willing to agree a reasonable extension (up to 28 days) where it is clear that - applying Denton - the court would grant relief from the sanction
• If you unreasonably oppose the application for relief or refuse to agree to an extension then you will be subjected to heavy costs penalties
• Failure to act reasonably means that you are not fulfilling your obligation to assist the court in furthering the overriding objective

Question 4

Norwich Pharmacal

Answer 4

• The CPR rules do not limit any other power which the court may have to order pre-action disclosure against third parties. One of these other powers is the Norwich Pharmacal principle.
• It provides that a person innocently caught up in the wrongdoing of another so that they are more than a mere witness can be compelled to disclose the identity of the wrongdoer so that proceedings may be brought against the proper defendant. This principle can be relied on to obtain disclosure of documents and other information.
• The pre-requisites of obtaining this kind of relief are:

1. a wrong must have been carried out, or arguably carried out, by an ultimate wrongdoer
2. there must be the need for an order to enable action to be brought against the ultimate wrongdoer; and
3. the person against whom the order is sought must: (a) be mixed up in it so as to have facilitated the wrongdoing; and (b) be able or likely to be able to provide the information necessary to enable the ultimate wrong-doer to be sued.

Other points to remember from this case:

• The wrong may be a crime, tort, breach of contract, equitable wrong or contempt of court - must be capable of being identified in general terms
• No need to prove the wrong, but you must at least show some reasonable basis for claiming that a wrong has been committed
• It is not necessary that the applicant brings court proceedings. The procedure is available where an applicant “desires to obtain redress against the wrong-doer - or to protect himself against further wrongdoing”.
• The person against whom the order is made must be mixed up in the wrongdoing, they cannot simply be a bystander or a mere witness.
• Applying the privilege against self-incrimination, a party has a defence to the disclosure of the identity of a wrongdoer where that disclosure would tend to incriminate the disclosing party. N.B. it must be the disclosure of the identity of another person that causes the risk.

Question 5

American Cyanamid Co v Ethicon

Answer 5

Lays down the three-stage test for the grant of interim injunctive relief:

1. Is there a serious question to be tried (i.e. ‘is the applicant’s case not frivolous or vexatious?’)? If yes –>

2. Would damages be an adequate remedy for a party injured by the court’s grant, or its refusal to grant, an injunction? Lord Diplock gave more detailed guidance on this point in the case:

(1) Start by asking whether damages would adequately compensate the claimant if they are ultimately successful at trial and an injunction has been refused

• If yes -> no injunction should be granted, however strong C’s claim appears
• If no -> consider whether the defendant would be adequately compensated under the undertaking that that C would give if they were granted an injunction (important to consider both the sum promised in the undertaking and the likelihood that C could actually pay this when the time comes). If these would be adequate, the injunction should be granted.

(2) If neither party would adequately be compensated by damages (i.e. if there is ‘doubt’ as to the adequacy of damages), then the court has to consider the balance of convenience

• Highly fact-sensitive
• If all factors appear evenly balanced the court should strive to maintain the status quo
• Very important to keep in mind the extent to which either party can be compensated by damages
• If balance is very equal, it may be appropriate to take into account the strength of the parties’ cases, but only to the extent that this is revealed by facts which are not in dispute (i.e. no mini-trial): this is a consideration of last resort
• Also important to consider when the trial will take place, as the interim injunction will generally last until then (i.e. what is the running time of the injunction) - this matters because particularly long-lasting injunctions may well have knock-on effects that are difficult to quantify (e.g. being kept out of the employment market for a really long time makes you less employable, so you are losing more than just earnings during the time of the injunction itself)

3. If not, where does the “balance of convenience” lie?