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30/11/2007 - Liability for misrepresentations in overseas credit card transactions extended to credit card entities as well as suppliers

The House of Lords recently decided that consumers who use their credit cards overseas are to receive the full protection of s. 75 of the Consumer Credit Act 1974, which provides, [i]inter alia, that creditors in credit card transactions, as well as suppliers of goods, are jointly and severally liable for losses where there is a claim for misrepresentation or breach of contract against the supplier. This means that consumers can claim against creditors as well as, or instead of, a supplier. This had long been the case in domestic credit card transactions, but the House of Lords extended the rule to overseas transactions.
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30/11/2007 - Court finds that deposit paid for purchase of Ritz Hotel is held on trust

In a claim involving fraudulent misrepresentation and conspiracy to defraud a potential purchaser of the Ritz Hotel, the High Court concluded that an agreement to transfer £1 million as a deposit was voidable on the basis that the funds were held on a consequential constructive trust. The claimant only sought relief for breach of contract in the event that relief under a constructive trust claim was unavailable.
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25/09/2007 - Court finds that deposit paid for purchase of Ritz Hotel is held on trust

In a claim involving fraudulent misrepresentation and conspiracy to defraud a potential purchaser of the Ritz Hotel, the High Court concluded that an agreement to transfer £1 million as a deposit was voidable on the basis that the funds were held on a consequential constructive trust. The claimant only sought relief for breach of contract in the event that relief under a constructive trust claim was unavailable.
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13/09/2007 - Warning for parties seeking an order for a Preliminary Issue

The Court of Appeal recently provided a warning about the dangers of ordering a preliminary issue in complicated proceedings where a determination of the issue does not lead to a resolution of the proceedings.
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09/09/2007 - Reduction in costs recovered by successful party due to estimate given in Allocation Questionnaire

In Douglas Tribe v Southdown Gliding Club and Others (Costs) the Court reduced the amount of costs that the defendants could recover because of the enormous discrepancy between the estimate given in their allocation questionnaire and the actual sum claimed. In the allocation questionnaire the first and third defendants estimated £50,000 for the cost of the action. The same two defendants submitted a final bill of £244,509.72, of which £150,640 was profit costs. The sum awarded to the first and third defendants, after careful calculation by Master Gordon-Saker, was £70,000.
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16/08/2007 - Corporate Manslaughter and Corporate Homicide Bill introduced

The much debated Corporate Manslaughter and Corporate Homicide Bill received Royal Assent on 26 July 2007. The Corporate Manslaughter and Corporate Homicide Act 2007 (the "Act") will come into force on 6 April 2008 and creates a new criminal offence of corporate manslaughter for corporate and other bodies (such as Government departments and police forces). The new offence replaces the common law crime of manslaughter by gross negligence. An unlimited fine can be imposed on a company (or other organization) found to have caused death due to gross corporate health and safety failures. The Government is due to issue guidance for organisations affected by the Act in the autumn. We will keep you updated.
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16/08/2007 - Gambling news: advertising "white list" announced

Regulations recently laid before Parliament under the Gambling Act 2005 (the "Act") ban gambling companies operating outside the European Economic Area (the "EEA") from advertising in the UK. Under the Act, which is due to come into force on 1 September 2007, operators licensed in foreign countries are not allowed to advertise gambling in the UK unless they are in the EEA, Gibraltar or are licensed in one of the "white-listed" jurisdictions.
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07/08/2007 - Compound Interest available at Common Law

The House of Lords have ruled in Sempra Metals Ltd v. Inland Revenue Commissioners and Another (18/7/2007) that compound interest may now available to claimants in common law actions. Previously, interest could generally only be claimed in accordance with s.35 of the Supreme Court Act or s.69 of the County Court Act, which was awarded at the court's discretion and calculated at a set rate. Compound damages were previously only available in very limited situations involving equity claims, such as those involving fraud and/or misapplication of funds by a fiduciary. The House of Lords held that these limitations were effectively artificial creations which did not reflect reality of the commercial world.
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27/07/2007 - Allied-Domecq cleared of misrepresentation - no 'duty to speak"

John Hamilton ("Hamilton") owned a third of the shares in Stebbings Inc. ("Stebbings") (together the "claimant"). The claimant invested in a Scottish company, Gleneagles Spring Water Company Limited ("Gleneagles"), with a view to marketing spring water from the Gleneagles Estate in Scotland as a high quality brand. After lengthy negotiations, the claimant entered into a subscription agreement with Allied-Lyons (now Allied Domecq) whereby Allied-Lyons became the majority shareholder in Gleneagles, acquiring the overall management and control of Gleneagles with responsibility for distribution.
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26/07/2007 - HOT STUFF! Facebook faces legal action for fraud

The long-running legal dispute over the origins of social networking website Facebook.com continues. The Boston district court has deferred making a decision until 8 August, giving extra time to the claimants to find evidence to support their claim.
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26/07/2007 - Contracts made over the telephone are binding

The High Court has ruled that an oral contract made over the phone was binding.
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05/07/2007 - Commercial Agents Regulations: assessing compensation

The House of Lords has ruled that where an agency agreement is terminated early, the compensation payable to the agent under the Commercial Agents (Council Directive) Regulations 1993 (the "Regulations") can be calculated by reference to the value of the agency.
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28/06/2007 - Unreasonable terms excluding liability for breach

The High Court has held that an exclusion clause in standard terms of business purporting to exclude all liability for any breach of contract was unreasonable under the Unfair Contract Terms Act 1977 ("UCTA") and, thus, unenforceable.
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28/06/2007 - Non-admissibility of pre-contract negotiations

The High Court has re-affirmed the general position established in Prenn v Simonds that pre-contract negotiations cannot be admitted in evidence as an aid to the construction of a written contract. Pre-contract negotiations will only be admissible where it is contended on proper grounds that the parties negotiated on an agreed basis, that there was an estoppel by convention, or that the contract should be rectified (the "exceptions to the rule").
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05/06/2007 - Companies Act 2006 - Significant changes to company law

The Act contains significant changes to the existing company law and many areas of new law, including codification and extension of directors' common law duties, with an obligation to have regard to a specified list of matters, additional rights for shareholders to bring derivative claims in the name of the company for breach of duty by directors, and the enhanced business review required by quoted companies.
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01/06/2007 - Remote Gambling

In April 2007, several months after the enactment of the highly controversial Unlawful Internet Gambling Act (UIGEA), Congressman Barney Frank introduced a bill to regulate internet gambling in the United States. The proposed Internet Gambling Regulation and Enforcement Act would not repeal the UIGEA but would modify it significantly, in particular, empowering the federal government to issue online gambling licences for the first time. Given the number of years it took anti-gambling lobbyists to ensure their legislation was passed, Frank faces a considerable challenge including opposition on a number of levels, not least, from state authorities and the national administration.
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01/06/2007 - Unfair prejudice: applicant able to claim an order for damages to be paid to the company

The Privy Council has recently ruled that a claimant could, in an application for unfair prejudice under Article 141 of the Companies (Jersey) Law 1991 (substantively the same as section 459 of the UK Companies Act 1985 and section 994 of the Companies Act 2006), claim an order for damages payable to the company. Provided the relief claimed would be of real financial benefit to the claimant, it did not matter that it would not benefit the claimant in its capacity as a shareholder.
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25/03/2007 - Party successful obtains Pre-Action Disclosure Order in fraud claim

The applicants were specialist mining and tunnelling contractors. The first two respondents were the successors to British Coal, and the parent company of a group of companies operating the British coal industry. The respondents were the applicants's principal source of custom.
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05/03/2007 - Bank fails to obtain pre-action disclosure on fraud claim

A property developer applied for a loan from the Bank to fund the purchase of a property. The Bank instructed the Defendant Valuer to carry out a valuation of the property, which was duly carried out by their London Head of Valuation. The Valuer reported, inter alia, that the market value of the freehold interest in the property, subject to and with the benefit of three occupational leases said to have been entered into when the developer acquired the property as proposed, was £16m. The report gave the value of vacant possession at £10.5m. In reliance on that valuation, the Bank made a loan of £10.5m and a further loan of £1m. It later became apparent that the three occupational leases referred to in the valuations were forgeries, and that the valuations were themselves flawed. The developer defaulted on the loans and appeared to have no assets. The Bank repossessed the property but anticipated that it would receive no more than £2m for it.
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05/03/2007 - Aspinalls Casino recovers £2m from customer

Between October 1994 and April 2006, the Defendant visited Aspinalls on over 600 occasions, purchasing gaming tokens to the value of over £91,000,000 and losing over £23,000,000. In March 2000, he lost £2m, drawing on four separate script or house cheques for £500,000 each drawn on a joint account of the Defendant and his wife. He was then given gaming tokens to the value of each cheque. The Defendant substituted the cheques with a single cheque for £2m, which the Defendant alleged was signed on the understanding that it would not be dated and that it would not be presented until after a dispute with a croupier had been resolved. On 14 March Aspinalls presented the substitute cheque, which had been dated 10 March. It was dishonoured as the Defendant had sent a fax to his bank countermanding payment. Aspinalls eventually issued proceedings and applied for summary judgment.
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04/03/2007 - BAE forced to disclose source of e-mail leaked from the solicitors representing anti-arms trade campaign organisation

BAE is an arms manufacturer based in the UK. In December 2006, the applicant's parliamentary co-ordinator sent an e-mail to people on the applicant's steering committee internal e-mail list and a number of members of the applicant's staff. The email contained confidential privileged legal advice from its solicitors in connection with its strategy for proposed judicial review proceedings which the applicant intended to initiate against the government, and to which the respondent would be an interested party. The applicant sought to challenge the decision of the Serious Fraud Office to discontinue its investigation into alleged corruption and bribery on the part of the respondent in the securing of arms supply contracts from the Government of Saudi Arabia.
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18/01/2007 - Are transcripts of witness interviews disclosable under CPR if they are also considered to be "confidential information" under S.348 FSMA ?

The collapse of the splits market in 2001 led to investigations by the FSA, which included interviews with the defendants' employees and former employees, under statutory powers, and transcripts of those interviews were supplied by the FSA to the defendants. In 2003, the Jersey Financial Services Commission (JFSC) conducted its own review relating to split capital investment companies administered or marketed in Jersey. Again, employees of the defendants were interviewed in the course of the JFSC's inquiry and the transcripts were supplied to the defendants.
The claimant sought inspection of documents which comprised largely of transcripts of those interviews conducted by the FSA and the JFSC. The defendants withheld inspection of those documents and objected to their inspection on the basis that such inspection was prohibited by s 348 of FSMA 2000, and that disclosure would constitute a criminal offence. The claimant challenged the defendants' claim to withhold inspection of those documents pursuant to CPR 31.19, SI 1998/3132, on the basis that those documents were relevant to the issues in the present proceedings and satisfied the criteria for standard disclosure in CPR 31.6.
The Chancery Division of the High Court was asked whether s. 348 of the Act prohibited inspection of the transcripts and other documents supplied by the FSA to the defendants even if those documents did no more than record information provided by employees of the defendants to the FSA, being information which came to their knowledge in the course of their employment, if it did not, then where the secondary recipient was a company and the information obtained by the FSA was provided in interviews by employees of the secondary recipient, what constituted the prior knowledge of the company.
The defendants accepted that, if s 348 did not prohibit the inspection of transcripts and other documents supplied by the FSA in their entirety, the documents could be redacted so as to excise information not previously known to them. How-ever, they submitted that the cost and difficulty of doing so, particularly when set against the value of what would be left, would make that a disproportionate exercise, and that accordingly, the court should exercise its discretion under CPR 31.12 to refuse to order inspection.
Gloster J. held that "the right of a party to refuse inspection of a relevant document was that it would be disproportionate and the court's task under CPR 31.12 was to determine whether that was so. S 348 of the Act did not prohibit the disclosure by a secondary recipient of transcripts either of his own interviews with the FSA or of interviews by the FSA with present or former employees of the secondary recipient, insofar as the transcripts contained information already and independently known to the secondary recipient. A company could only have knowledge through the knowledge of its officers, employees or other agents. If, as had been decided, an individual secondary recipient was not prohibited from disclosing a document supplied by the FSA and containing information already known to him, it should follow that the same applied to a corporate secondary recipient, applying the rules of attribution. In those circumstances, transcripts of interviews with present and former employees of the defendants were disclosable by those companies in those proceedings, except and to the extent that they contained information which was not previously known to them, applying for that purpose the ordinary rules of attribution. The exceptional material would therefore be either confidential information (as defined) put by the FSA to the interviewee or information known to the employee but not attributable to his employer. Having considered the relevant matters, the balance of likely value as against the problems associated with redaction favoured an order for inspection, rather than a refusal of inspection.
The claimant would be permitted inspection of the documents in issue, subject to redaction in accordance with the relevant principles."
(Real Estates Opportunities Ltd v Aberdeen Asset Managers Jersey Ltd and others[2006] EWHC 3249 (Ch))
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18/01/2007 - Whether an offer of settlement necessarily attracts "without prejudice" privilege

The Commercial Court was recently asked to determine whether an offer of settlement by the defendant, which was set out in a letter not marked "without prejudice" attracted privilege.
The court held that "it was settled law that in determining whether correspondence attracted the without prejudice privilege, notwithstanding the fact that the correspondence in issue had not been headed without prejudice, the key issue that fell to be determined was whether it was clear from the surrounding circumstances that the relevant correspondence or discussion had been part of negotiations genuinely aimed at settlement.
In the instant case, it had not been appropriate for the correspondence in issue to have been characterised as without prejudice. On a true construction the letters had been open offers, albeit hedged with conditions and constraints. Accordingly, they had not attracted the privilege and the defendant's application would be dismissed."
Shortly after a without prejudice meeting had taken place between representatives of the parties, the defendant confirmed its position in a letter not headed "without prejudice" but in the text of the letter, the defendant stated that without prejudice to its right to deny liability they supported a settlement up to the present value of what its share of liability. Following receipt of that letter, the claimant acknowledged its liability to its insured and entered into an interim settlement. The claimant sought to recover the interim settlement from the defendant. In a letter, again not headed without prejudice, the defendant refuted its liability in respect of the insured's claims but offered to pay the claimant a sum in full and final settlement of all claims arising from the Dow breast implant litigation. The claimant issued proceedings and sought summary judgment against the defendant for its share of the interim settlement payment. The defendant applied to have parts of the claimant's supporting evidence struck out on the grounds that it referred to without prejudice correspondence.
(English and American Insurance Co Ltd v. Axa Re SA [2006] EWHC 3323 (Comm))
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17/01/2007 - Question of what is in the best commercial interests for a company being wound up where there is an allegedly misfeasant director

M and W, were shareholders in a company, M holding 73.75% of the shares, and W holding 25%. The relationship between the respondents broke down, and M put the company into members' voluntary liquidation and made a declaration of solvency.
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2007 City Law News