SOURCEBOOK ON OBLIGATIONS AND LEGAL REMEDIES Second Edition
Cavendish Publishing Limited
London • Sydney
SOURCEBOOK ON OBLIGATIONS AND LEGAL REMEDIES Second Edition
Geoffrey Samuel, MA, LLB, PhD (Cantab), Dr (Maastricht) Professor of Law, Kent Law School
Cavendish Publishing Limited
London • Sydney
Second edition first published in Great Britain 2000 by Cavendish Publishing Limited, The Glass House, Wharton Street, London WC1X 9PX, United Kingdom Telephone: +44 (0) 20 7278 8000 Facsimile: +44 (0) 20 7278 8080 E-mail:
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© Samuel, Geoffrey 2000 First edition 1995 Second edition 2000
All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, except under the terms of the Copyright Designs and Patents Act 1988 or under the terms of a licence issued by the Copyright Licensing Agency, 90 Tottenham Court Road, London W1P 9HE, UK, without the permission in writing of the publisher.
Samuel, Geoffrey, 1947 Obligations and Legal Remedies—2nd ed—(Cavendish Publishing Sourcebook series) 1 Obligations (Law)—England 2 Obligations (Law)—Wales 3 Remedies (Law)—England 4 Remedies (Law)—Wales I Title 346.4'2'02
ISBN 1 85941 522 9
Printed and bound in Great Britain
To all my friends
PREFACE TO THE FIRST EDITION
This sourcebook started life as a collection of materials for the DEA courses on the common law at Paris I and II. It is offered in this English version, in these days of research ratings, simply as an old fashioned undergraduate teaching casebook, although it is to be hoped that there is material and comment which will be of interest to postgraduates and law teachers. Some of the comments are somewhat provocative; the purpose is simply to bring a little life to the case law and to the doctrine and to stimulate readers into responses. The aim is to get students to see that law is not just about learning and applying rules. In adopting such an approach, I am deliberately adopting the methods of those teachers I found, and still find, so stimulating. Many thanks to my colleague and friend Pierre Legrand, now Professor of Comparative Legal Culture at Tilburg University, not only for encouraging me to publish it in England, but for correcting my French in the Paris edition and giving me so many ideas with respect to comparative law. Many thanks also to Jo Reddy of Cavendish Publishing for agreeing almost at once to accept the manuscript (with major changes of course) and for being so patient both with respect to this manuscript, rewritten during the first months of my Paris appointment, and with my other commitments to Cavendish Publishing. I should, in addition, like to acknowledge the great debt owed to Paris I and II for providing me with the opportunity to reflect upon the common law in the context of the civilian tradition; the many discussions with professors and students are proving most stimulating and I hope that some of this will be reflected in the notes and questions in this present collection. The law faculty at the University of Nancy also deserves thanks for giving me many opportunities over the last few years to research into, and discuss, French law, legal history and comparative law in the comfort of its town and institution. Of course, I owe much to others as well—professionally, to my teachers, friends and acquaintances in common law and civil law faculties who have proved so supportive, not forgetting the works of others, too numerous to mention by name, but hopefully reflected in the notes in this collection. Beyond the profession, my family, as usual, have been particularly patient, not just in uprooting themselves to come to Paris for a year, but in not complaining too much about the attempts to meet deadlines. A special thanks.
Geoffrey Samuel La Sorbonne May 1995
vii
PREFACE TO THE SECOND EDITION
This second edition gives me the welcome opportunity not just to update the material, but to double the size of the book and to place that little bit more emphasis on Europe. The original orientation towards method and remedies is retained and developed, although the new edition has equally allowed me to expand the coverage of non-contractual obligations. Tort and restitution now have their own separate chapters which, inter alia, contain generous extracts from important recent cases. Many thanks to Kevin Gray, John Bell, Bernard Rudden, Pierre Legrand and my colleagues here at Kent for their support and encouragement. Thanks, also, to the Universities of Paris II and Nancy for the continuing invitations to their law faculties which allow me to pursue my interests in aspects of the civil law. Finally, another special thanks to my family. Geoffrey Samuel Kent Law School October 1999
ix
CONTENTS
Preface to the First Edition Preface to the Second Edition Table of Cases Table of Statutes Table of Statutory Instruments Table of Other Legislation Table of Abbreviations Introduction 1
2
vii ix xvii li lvii lix lxi lxv
THE STRUCTURE OF THE COMMON LAW 1 INTRODUCTION 2 THE ROLE OF THE COURTS (a) Trial judge (b) Court of Appeal (c) House of Lords 3 THE ROLE OF PRECEDENT 4 THE ROLE OF PARLIAMENT 5 THE ROLE OF INSTITUTIONS (a) The institutional system (b) Legal subject (persona) (c) Legal object (res) (d) Legal remedy (actio) 6 THE ROLE OF LEGAL CATEGORIES (a) Introduction (b) Civil and criminal law (c) Contract (d) Tort (e) Restitution (unjust enrichment) (f) Property (1): real and personal property (g) Property (2): bailment (h) Equity 7 THE ROLE OF THE CATEGORIES OF PUBLIC AND PRIVATE LAW (a) Introduction (b) Administrative contracts (c) Administrative liability in tort (d) Restitution and public law 8 THE ROLE OF TEXTBOOKS
85 85 88 90 104 107
LEGAL METHOD AND THE COMMON LAW 1 INTRODUCTION 2 CAUSES OF ACTION
111 111 114
xi
1 1 2 3 7 10 13 23 26 27 31 38 50 57 57 60 62 65 70 78 80 83
Sourcebook on Obligations and Remedies
3 4 5 6
7
8
9 3
(a) Historical considerations: the forms of action (b) Modern law: remedies and rights PLEADINGS (STATEMENTS OF CASE) THE LEGAL RULE GENERAL PRINCIPLES OF LAW LEGAL CONCEPTS (a) Normative concepts (i) Rights (ii) Duty (b) Quasi-normative concepts (i) Introductory note (ii) Interests (iii) Proximity (iv) Damage (v) Interests and damage LAW AND FACT (a) Questions of law and questions of fact (b) Establishing the facts (c) Legal categorisation of the facts (d) Role of quasi-normative concepts (e) Utilisation of hypothetical facts to determine the law LEGAL REASONING (a) Introductory note (b) Reasoning in the social sciences (c) Induction and deduction (d) Syllogism (e) Reasoning by elimination (f) Reasoning by absurdity (g) Reasoning by holistic analysis (h) Reasoning by individualistic analysis (i) Reasoning by analogy (j) Reasoning by metaphor (k) Appeal to values (1) Appeal to policy (m) Appeal to certainty (n) Appeal to symmetry (o) Practical reasoning INTERPRETATION OF TEXTS
REMEDIES 1 INTRODUCTION 2 REMEDIES AND RIGHTS 3 REMEDIES AND INTERESTS xii
114 116 118 122 123 125 125 125 131 132 132 133 136 141 156 157 157 158 161 163 164 167 167 169 177 183 187 187 188 188 190 192 193 194 198 199 199 202 209 209 209 220
Contents
4
5
6 7 8 9 10 11 12
13 14 15
16 17 18 4
SELF-HELP (a) Personal justice (b) Self-protection (c) Refusal to pay DEBT (a) Contractual debt (b) Debt and damages (c) Non-contractual debt TRACING SPECIFIC PERFORMANCE RESCISSION IN EQUITY RECTIFICATION IN EQUITY ACCOUNT SUBROGATION INJUNCTION (a) The nature of an injunction (b) Interlocutory injunction (interim orders) (c) The role of injunctions DECLARATION DISCOVERY OF DOCUMENTS DAMAGES (a) The role of damages (b) Contractual liability and damages (c) Tortious liability and damages (d) Exemplary damages (e) Personal injury (f) Fraud (g) Damages for wrongful interference (h) Loss of a chance (i) The limitation of liability (j) Damages in equity REMEDIES AND PUBLIC LAW ACTIONS IN REM LIENS
INTRODUCTION TO CONTRACTUAL OBLIGATIONS 1 INTRODUCTION 2 CONTRACT AND THE LAW OF OBLIGATIONS 3 TYPES OF CONTRACT (a) Bilateral contracts (b) Unilateral contracts (c) Contract or contracts 4 CONTRACTUAL LIABILITY xiii
222 222 224 226 230 230 237 239 240 249 256 265 267 268 270 270 271 276 281 285 293 293 294 307 310 311 313 328 332 339 361 365 369 373 379 379 380 384 384 385 386 389
Sourcebook on Obligations and Remedies
5 6 7 8 9
STATUS AND CONTRACT PROMISE AND AGREEMENT FREEDOM OF CONTRACT GOOD FAITH THE INTERPRETATION OF CONTRACTS
400 402 406 409 416
5
THE FORMATION OF A CONTRACT 1 INTRODUCTION 2 OFFER AND ACCEPTANCE (a) Introduction (b) Fact and law (c) Offers and the consumer (d) Offers and commerce (e) The end of an offer (f) Pre-contractual liability 3 INTENTION AND CERTAINTY 4 CONSIDERATION (a) Introduction (b) Validity of consideration (c) Consideration and abuse of rights (d) Third parties 5 MISREPRESENTATION (a) Definition of misrepresentation (b) Liability in contract (c) Liability in tort (1): deceit (d) Liability in tort (2): negligence (e) Liability in tort (3): statute (f) Rescission in equity (g) Liability in account 6 MISTAKE (a) Introduction (b) Error in corpore (c) Error in negotio (d) Error in persona (e) Error in verbis 7 FRAUD 8 DURESS 9 UNDUE INFLUENCE
421 421 424 424 424 426 430 433 434 447 448 448 449 453 458 466 466 466 469 470 473 476 482 483 483 488 499 501 503 503 504 508
6
NON-PERFORMANCE OF A CONTRACT 1 INTRODUCTION 2 LIABILITY AND IMPLIED TERMS
511 511 512
xiv
Contents
7
3 4 5 6 7 8
BREACH AND NON-PERFORMANCE THE ROLE OF FAULT CONTRACTUAL LIABILITY FOR PEOPLE CONTRACTUAL LIABILITY FOR THINGS EXCLUSION AND LIMITATION CLAUSES REMEDIES AND BREACH (a) Self-help (b) Damages (c) Debt 9 IMPEDIMENT TO PERFORMANCE 10 ILLEGALITY AND PERFORMANCE 11 CONTRACT: FINAL OBSERVATIONS
516 522 533 543 551 572 572 578 581 588 602 609
NON-CONTRACTUAL OBLIGATIONS (1): TORT 1 INTRODUCTION TO NON-CONTRACTUAL OBLIGATIONS 2 THE LEGACY OF THE FORMS OF ACTION 3 DAMAGE CAUSED TO ANOTHER (a) Damage (b) Damage and contribution (c) Damage and time (d) Damage and causation 4 LIABILITY FOR INDIVIDUAL ACTS 5 LIABILITY FOR PEOPLE 6 LIABILITY FOR THINGS 7 LIABILITY FOR WORDS (a) Defamation (b) Negligence (c) Inducing a breach of contract (d) Malicious prosecution (e) Trespass 8 PARTICULAR LIABILITIES (a) Professional liability (b) Local authorities (c) Police 9 ROAD ACCIDENTS (a) Breach of statutory duty (b) Public nuisance (c) Negligence (d) Burden of proof (e) Liability of a car owner 10 DEFENCES TO TORT ACTIONS
611 611 612 615 615 617 621 625 639 645 660 685 685 693 695 699 702 702 702 727 757 758 758 761 763 765 766 770
xv
Sourcebook on Obligations and Remedies
8
11 ABUSE OF RIGHTS POSTSCRIPT: LIABILITY FOR WORDS (DEFAMATION)
774 775
NON-CONTRACTUAL OBLIGATIONS (2): RESTITUTION 1 INTRODUCTION: NON-CONTRACTUAL DEBT CLAIMS 2 QUASI-CONTRACTS (a) Introduction (b) The action for money had and received (c) The action for money paid (d) Quantum meruit 3 PROPRIETARY REMEDIES (a) Introduction (b) Common law proprietary claims (c) Equitable proprietary claims 4 DEFECTIVE TRANSACTIONS (a) Mistake (b) Fraud (c) Duress (d) Undue influence (e) Incapacity (f) Illegal contracts (g) Contracts discharged through breach (h) Contracts discharged through frustration 5 RESTITUTION FOR WRONGS (a) Common law claims for damages (b) Claims in equity 6 UNJUST ENRICHMENT 7 LAW OF OBLIGATIONS: FINAL OBSERVATIONS
777 778 781 781 782 790 793 796 796 798 799 823 823 832 832 833 834 835 835 838 838 838 839 849 853
Index
855
xvi
TABLE OF CASES A/S Awilco of Oslo v Fulvia SpA Di Navigazione of Cagliari; Chikuma, The [1981] 1 WLR 314 Abse v Smith [1986] 1 QB 536 Addis v Gramophone Co Ltd [1909] AC 488 Adler v Dickson [1955] 1 QB 158 Aerial Advertising Co v Batchelors Peas Ltd (Manchester) [1938] 2 All ER 788 Agip (Africa) Ltd v Jackson [1990] Ch 265, Ch D; [1991] Ch 547 Air Canada v Secretary of State for Trade (No 2) [1983]2 AC 394 Airedale NHS Trust v Bland [1993] AC 789 Al-Kandari vJR Brown Co [1988] QB 665 Albacruz (Cargo Owners) v Albazero (Owners); Albazero, The [1977] AC 774 Albazero, The See Albacruz (Cargo Owners) v Albazero (Owners) Alder v Moore [1961] 2 QB 57 Aldora, The [1975] QB 748 Alexandrou v Oxford [1993] 4 All ER 328 Allen v Bloomsbury Health Authority [1993] 1 All ER 651 Allen v Gulf Oil Refining Ltd [1980] QB 156 Allen v Jambo Holdings Ltd [1980] 2 All ER 502 Allied Irish Banks plc v Byrne [1995] 2 FLR 325 Allied Maples Group Ltd v Simmons and Simmons [1995] 1 WLR 1602 Alman v Associated Newspapers Ltd (1980) unreported, 20 June Aluminium Industrie Vaasen BV v Romalpa Aluminium Ltd [1976] 2 All ER 552 270 American Cyanamid Co v Ethicon Ltd [1975] AC 396 Ampthill Peerage Case [1977] AC 547 Anchor Brewhouse Developments v Berkley House [1987] EG 173 Andre et Compagnie SA v Marine Transocean Ltd [1981] QB 694 Angliss (W) and Co (Australia) Proprietary Ltd v Peninsular and Oriental Steam Navigation Co [1927] 2 KB 456 Anglo-Continental Holidays Ltd v Typaldos Lines (London) Ltd [1967] 2 Lloyd’s Rep 61 xvii
17, 198, 418, 420 5 305, 311, 324–26 720 325, 327 240, 798, 799, 851 12 32, 33, 135, 633 96 294, 460, 464, 707, 710
587 239, 781 138, 139 622, 625 678, 739 272, 373 480 332, 625 474
17, 271 33 280 19
366, 715 327
Sourcebook on Obligations and Remedies Anns v Merton LBC [1978] AC 728
344, 643, 654, 721, 722, 723, 730, 739, 743–5, 747, 753
Anton Piller KG v Manufacturing Processes Ltd See Piller (Anton) KG v Manufacturing Processes Ltd Arantzazu Mendi, The [1939] AC 256 Archer v Brown [1985] QB 401 Argentino, The (1888) 13 PD 191 Arkwright vNewbold (1881) 17Ch D 301 Ashington Piggeries Ltd v Christopher Hill Ltd, See Christopher Hill Ltd v Ashington Piggeries Ltd Asmore, Benson, Pease and Co v AV Dawson Ltd [1973] 1 WLR 828 Associated Distributors Ltd v Hall [1938] 2 KB 83 Associated Japanese Bank (International) Ltd v Credit du Nord SA[1989] 1 WLR 255 Associates British Ports v Transport and General Workers Union [1989] 1 WLR 939 Atkins (GW) Ltd v Scott (1991) 7 Const LJ 215 Atlantic Lines and Navigation Co Inc v Hallam Ltd; Lucy, The [1983] 1 Lloyd’s Rep 188 Atlas Express Ltd v Kafco (Importers and Distributors) Ltd [1989]QB 833 Attia v British Gas plc [1988] QB 304 Attica Sea Carriers Corp v Ferrostaal Poseidon Bulk Reederei GmbH [1976] 1 Ll Rep 250 Attorney General v Guardian Newspapers (No 2) [1990] AC 109 Attorney General v PYA Quarries [1957] 2 QB 169 Attorney General’s Reference (No 2 of 1992) [1994] QB 91 Avon Finance Co Ltd v Bridger [1985] 2 All ER 281 Baden v Société Générale pour Favoriser le Développement du Commerce et de 1’Industrie en France SA [1993] 1 WLR 509 Bailey v Bullock [1950] 2 All ER 1167 Bainbrigge v Browne (1881) 18 Ch D 188 Baker v Market Harborough Industrial Co-operative Society [1953] 1 WLR 1472 Ballard v Tomlinson (1885) 29 Ch D 115 xviii
370 60, 313 80 469
609 582 484, 493 280 306 474 507 137, 519, 522, 523, 616 235 268, 839 222 764 263, 499, 509, 833
845, 848 298 260 394 665
Table of Cases Bamford v Turnley (1862) 3 B & S 62 667 Banco, The [1971] P 137 373 Bank of Credit and Commerce International SA v Aboody [1990] 1 QB 923 258, 260 Bank of Montreal v Stuart [1911] AC 120 259 Bank of Nova Scotia v Hellenic Mutual War Risks Association (Bermuda) Ltd [1990] 1 QB 818 398 Bankers Trust Co vShapira [1980] 1 WLR 1274 818 Banque Belge pour 1’Etranger v Hambrouck [1921] 1 KB 321 241 Banque Bruxelles Lambert SA v Eagle Star Insurance Co Ltd [1997] AC 191 315, 320, 353, 722 Banque Financière de la Cité SA V Westgate Insurance Co, sub nom Banque Keyser Ullman v Skandia (UK) Insurance Co [1991] 2 AC 249; [1990] 1 QB 665 488 Banque Keyser Ullman v Skandia Insurance See Banque Financière de la Cité SA v Westgate Insurance Co Barclays Bank plc v Fairclough Building Ltd [1995] QB 214 118, 360, 395 Barclays Bank v O’Brien [1993] QB 109; CA; [1994] 1 AC 180, HL 38, 196, 256, 257, 264, 479–81, 509, 510, 833 Barker v Herbert [1911] 2 KB 633 675 Barnes v Addy (1874) LR 9Ch App 244 843 Barnett v Chelsea & Kensington Hospital Management Committee [1969] 1 QB 428 352 Barrett v Enfield LBC [1999] 3 WLR 79 131, 141, 748, 757 Barrett v Ministry of Defence [1995] 1 WLR 1217 641, 645 Barver v NSW Bank [1996] 1 WLR 641 237 Beamish v Beamish (1861) 9 HL Cas 274 15 Bell v Lever Brothers [1932] AC 161 20, 379, 484, 486, 490, 495–98, 832 Benjamin vStorr (1874) LR 9CP 400 219 Bentsen v Taylor Sons & Co (No 2) [1893] 2 QB 274 575 Beresford v Royal Insurance Co Ltd [1938] AC 586 633 Berkoff v Burchill [1996] 4 All ER 1008 690 Berry v Berry [1987] Fam 1 455 Best v Samuel Fox & Co Ltd [1952] AC 716 69, 195, 299, 615 Beswick v Beswick [1968] AC 58; [1966] Ch 538 41, 78, 126, 157, 163, 164, 221, 222, 249, 251, 436, 459, 460, 462, 465, 466, 512, 610, 694, 710, 774, 789, 799, 853 xix
Sourcebook on Obligations and Remedies Billings (AC) Sons Ltd v Riden [1958] AC 240 Birmingham and District Land Co v London and North Western Ry Co (1888) 40 ChD 268 Birse Construction v Haistie Ltd [1996] 1 WLR 675 Black v Yates [1992] QB 526 Blackpool and Fylde Aero Club Ltd v Blackpool BC [1990] 1 WLR 1195
Blue Circle Industries plc v MOD [1999] 2 WLR 295 Bolton (HL) (Engineering) Co Ltd v TJ Graham & Sons Ltd [1956] Ch 577 Bolton v Mahadeva [1972] 1 WLR 1009
345 458 68, 617, 792 117 58, 65, 90, 133, 163, 166, 194, 380, 436, 440, 442, 446, 610, 737, 774 155, 685 34 65, 227, 228, 237, 511, 514, 518, 519, 602, 790, 795, 835, 838 14, 52 309
Bolton v Stone [1951] AC 850 Bone v Scale [1975] 1 All ER 787 Borag, The See Compania Financiera ‘Soleada’ SA Boscawen v Bajwa [1995] 4 All ER 769 244, 269, 799 Bourgoin SA v Ministry of Agriculture, Fisheries and Food [1986] QB 716 95 Bourhill v Young [1943] AC 92 521, 522 Bowmaker Ltd v Wycombe Motors Ltd [1946] KB 505 374 Bowmakers Ltd v Barnett Instruments Ltd [1945] KB 45 605, 606, 608, 789 Boys v Chaplin [1971] AC 356 17 BP Exploration (Libya) Ltd v Hunt (No 2) [1979] 1 WLR 783; [1981] 1 WLR 232, CA; [1983] 2 AC 352, HL 838 Bradford Building Society v Borders [1941] 2 All ER 205 469, 488, 504, 694 Bradford CC v Arora [1991] 2 QB 507 311 Bradford Corporation v Pickles [1895] AC 587 67, 222, 223, 640, 699, 774 Brandeis Goldscmidt & Co v Western Transport [1981] QB 864 329 Brasserie du Pêcheur v Germany [1996] QB 404 383 Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corporation Ltd [1981] AC 909 16, 18–20 Bridge v Campbell Discount Co Ltd [1962] AC 600 187, 581 Bridlington Relay Ltd v Yorkshire Electricity Board [1965] Ch 436 144, 145 Britannic Merthyr Coal Co v David [1910] AC 74 759 xx
Table of Cases British Airways Board v Laker Airways Ltd [1985] AC 58; [1984] QB 142 British Columbia Saw-Mill Co v Nettleship (1868) LR 3 CP 499 British Movietonews Ltd v London and District Cinemas Ltd [1951] 1 KB 190 British Railways Board v Herrington [1972] AC 877 British Steel Corporation v Cleveland Bridge & Engineering Co Ltd [1984] 1 All ER 504 British Transport Commission v Gourley [1956] AC 185 British Waggon Co v Lea and Co (1880) 5 QBD 149 British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd [1912] AC 673 Brook’s Wharf & Bull Wharf Ltd v Goodman Brothers [1937] 1 KB 534 Broome v Cassell & Co Ltd See Cassell & Co Ltd v Broome . Brown v Boorman (1844) 11 Cl & Fin 1; 8 ER 1003 Brunsden v Humphrey (1884) 14 QBD 141 Bryant v Herbert (1877) 3 CPD 389 Buckland v Palmer [1984] 1 WLR 1109 Building and Civil Engineering Holidays Scheme Management Ltd v Post Office [1966] 1 QB 247 Bumper Development Corporation v Commissioner of Police for the Metropolis [1991] 1 WLR 1362 Bunge Corporation v Tradax SA [1981] 1 WLR 711 Burns, The [1907] P 137 Burris v Azadani [1995] 1 WLR 1372 Burton v Winters [1993] 1 WLR 1077 Business Computers International Ltd v Registrar of Companies [1988] Ch 229 Butler Machine Tool Co Ltd v Ex-Cell-O Corporation (England) [1979] 1 WLR 401 C (A Minor) v DPP [1996] AC 1 CBS Songs Ltd v Amstrad Consumer Electronics plc [1988] AC 1013 CTN Cash & Carry v Gallaher Ltd [1994] 4 All ER 714
xxi
219 80 597 651 444, 446, 794 313 540
460 528, 790
547 622 56, 67, 113, 114, 187, 613, 780 622 80 36 577 369, 371 133, 278 223 96 190, 430, 432 6
437 8, 49, 452, 504, 507, 833
Sourcebook on Obligations and Remedies Cambridge Water Co v Eastern Leather plc [1994] 2 AC 264
24, 68, 183, 219, 383, 641, 662, 665, 674 Camelot plc v Centaur Communications Ltd [1999] QB 124 135, 293, 691 Campbell (A Bankrupt), In re [1997] Ch 14 39 Canadian Pacific Ry Co vLockhart [1942] AC591 537 Canham v Barry (1855) 24 LJCP 100 405 Caparo Industries plc v Dickman [1990] 2 AC 605 26, 94, 133, 136, 191, 192, 353, 354, 636, 694, 709, 711, 720, 731, 732, 734, 743, 751, 753 Carl Zeiss Stiftung v Herbert Smith Co (No 2) [1969] 2 Ch 276 845, 846 Carlill v Carbolic Smoke Ball Co [1893] 1 QB 256 132, 385, 386, 428–30, 433, 511, 517, 518 Cassell & Co v Broome [1972] AC 1027 16, 17, 60, 61, 69, 293, 310, 311, 687, 689 Cassidy v Ministry of Health [1951] 2 KB 343 345, 394, 732 Cattle v Stockton Waterworks Co (1875) LR 10 QB 453 195, 653 Caxton Publishing Co Ltd v Sutherland Publishing Co [1939] AC 178 HL 81 Central London Property Trust Ltd v High Trees House Ltd [1947] KB 130 424, 454, 455, 457, 588 Centrovincial Estates plc v Merchant Investors Assurance Co Ltd (1983) The Times, 8 March, CA 421 Chaplin v Hicks [1911] 2 KB 786 334, 335, 337, 338 Chapman v Honig [1963] 2 QB 502 775 Chase Manhatten Bank NA v Israel-British Bank (London) Ltd [1981] Ch 105 243, 809, 812 Chase v Westmore (1816) 5 M & S 180; 105 ER 1016 374 Chasemore v Richards (1859) 7 HLC 349; 11 ER 140 223 Cheshire v Bailey [1905] 1 KB 237 81 Chief Constable of Leicestershire v M [1989] 1 WLR 20 841, 842 Chief Constable of North Wales v Evans [1982] 1 WLR 1155 87 Chikuma, The See A/S Awilco of Oslo v Fulvia SpA di Navigazione of Cagliari; Chikuma, The China-Pacific SA v Food Corp of India; Winson, The [1983] AC 939 792 Christie v Griggs (1809) 2 Camp 79 546 Christie v Leachinsky [1947] AC 573 193, 202 Christopher Hill Ltd v Ashington Piggeries Ltd [1972] AC 441 345, 387 xxii
Table of Cases Cia Sud Americana de Vapores v Shipmair BV; Teno, The [1977] 2 Lloyd’s Rep 289 Clark vUrquhart [1930] AC 28 Clarke v Cato [1998] 1 WLR 1647 Clarke v Dickson (1858) EB & E 148; 120 ER 463 Clarke v Dunraven (Earl); Satanita, The [1897] AC 59 Clarke v Shee and Johnson (1774) 1 Cowp 197 Clay v AJ Crump and Sons Ltd [1964] 1 QB 533 Cleaver v Mutual Reserve Fund Life Association [1892] 1 QB 147 Co-operative Insurance Society Ltd v Argyll Stores Ltd [1998] AC 1 Coggs v Bernard (1703) 2 Ld Raym 909; 92 ER 107 Cointax v Myhan Son [1913] 2 KB 220 Coldman v Hill [1919] 1 KB 443 Coltman v Bibby Tankers; Derbyshire, The [1988] AC 276 Columbia Picture Industries Inc vRobinson [1987] Ch 38 Commissioner for Railways v Quinlan [1964] AC 1054 Commissioner of Public Works v Hills [1906] AC 368 Compania Financiera ‘Soleada’ SA Netherlands Antilles Ships Management Corp and Dammers and van der Heide’s Shipping and Trading Co v Hamoor Tanker Corp Inc; Borag, The [1981] 1 WLR 274 Compania Naviera Vascongada v SS Cristina [1938] AC 485 Connecticut Fire Insurance Co v Kavanagh [1892] AC 473 Constantine (Joseph) SS Line v Imperial Smelting Corp [1942] AC 154 Cooden Engineering Co Ltd v Stanford [1953] 1 QB 86 Cook vS [1966] 1 WLR 635 Cooper v Phibbs (1867) LR 2 HL 149 Cope v Sharpe (No 2) [1912] 1 KB 496 Corocraft Ltd v Pan-American Airways [1969] 1 QB 616 Cory v Thames Ironworks and Shipbuilding Co (1872) LR 7CP 499 Cosslett (Contractors) Ltd, Re [1998] 2 WLR 131 Couldery v Bartram (1881) 19 Ch D 394 Courtney and Fairbairn Ltd v Tolaini Brothers (Hotels) Ltd [1975] 1 WLR 297 xxiii
228 318 208 469 406 785 713, 722 634 65, 253 81 327 80, 580 25 275 646 837
350 371 120 65, 523, 524, 529, 531 582 580 157 99 25 80 377 453 441
Sourcebook on Obligations and Remedies Cowan de Groot Properties Ltd v Eagle Trust plc [1992] 4 All ER 700 Cox v Phillips Industries Ltd [1976] 1 WLR 638 Cozens v Brutus [1973] AC 854 Crabb v Arun DC [1976] Ch 179 Crawford v AEA Prowting Ltd [1973] QB 1 Credit Lyonnais Bank Netherland v Burch [1997] 1 All ER 144 Cresswell v Sirl [1948] 1 KB 241 Cuckmere Brick Co v Mutual Finance Ltd [1971] Ch 949 Currie v Misa (1875) LR 10 Ex 153 Cutler v Wandsworth Stadium Ltd (Cutler’s Case) [1949] AC 398 Cutter v Powell (1795) 6 Term Rep 320; 101 ER 573 Czarnikow (C) Ltd v Koufos See Koufos v Czarnikow (C); Heron II, The D & C Builders Ltd v Rees [1966] 2 QB 617 D v National Society for the Prevention of Cruelty to Children [1978] AC 171 Daily Mirror Newspapers v Gardner [1968] 2 QB 762 Dakin (H) & Co Ltd v Lee [1916] 1 KB 566 Damon Compania Naviera SA v Hapag-Lloyd International SA; Blankenstein, The [1985] 1 WLR 435, CA Dann v Hamilton [1939] 1 KB 509 Darbishire v Warren [1963] 1 WLR 1067 Darlington DC v Wiltshire Northern Ltd [1995] 1 WLR 68 Davies v Taylor [19754] AC 207 Davis Contractors Ltd v Fareham UDC [1956] AC 696 Davy v SpelthorneBC [1984] AC 262 Day v McLea (1889) 22 QBD 610 De L’Isle (Viscount) v Times Newspapers [1988] 1 WLR 49 Deichland, The [1990] 1 QB 361 Department of Social Security v Butler [1995] 1 WLR 1258 Derby & Co v Weldon (No 5) [1989] 1 WLR 1244 Derbyshire CC v Times Newspapers Ltd [1993] AC 534 xxiv
846 580 206 457, 248 18 509, 510, 833 99 268 452 728, 760 226, 794
452, 453, 455, 507, 832 197 696, 697 227
238, 239 638 360 157, 459 338 89, 485, 496, 529, 593, 599, 600, 610, 794 218 454 7 372 367, 369 3, 7 87, 97, 104, 691
Table of Cases Derbyshire, The See Coltman v Bibby Tankers Derry v Peek (1889) 14 App Cas 337; (1887) 37 Ch D 541 469, 694 Devon Lumber Co Ltd v MacNeill (1987) 45 DLR (4th) 300 150 Deyong vShenburn [1946] KB 227 646 Diamond v Campbell-Jones [1960] 1 All ER 583 340 Dick Bentley Productions Ltd v Harold Smith (Motors) Ltd [1965] 1 WLR 623 467–69, 487 Dick, Re Knight v Dick [1953] Ch 343 200 Dictator, The [1892] P 304 370, 371 Dies v British & International Mining & Finance Corporation [1939] 1 KB 724 117 Dimskal Shipping Co SA v International Transport Worker’s Federation; Evia Luck, The [1992] 2 AC 152 508, 699, 852 Diplock, Re Diplock v Wintle [1948] Ch 465 241, 243 Director of Public Prosecutions v Smith [1961] AC 290 17 Dodd Properties (Kent) Ltd v Canterbury City Council [1980] 1 WLR 433 315 Dominion Mosaics & Tile Ltd v Trafalgar Trucking Co Ltd [1990] 2 All ER 246 308 Donoghue v Stevenson [1932] AC 562 20, 49, 65, 68, 123, 124, 131, 141, 162, 165, 180–83, 379, 382, 383, 470, 473, 520, 640, 641, 646, 649, 674, 676, 685, 710, 712, 718, 721, 722, 738, 831 Dorset Yacht Co v Home Office See Home Office v Dorset Yacht Co Downs v Chappell [1997] 1 WLR 426 315, 316, 320, 469, 792 Downside Nominees Ltd v First City Cororation Ltd [1993] AC295 97 Doyle v Olby (Ironmongers) Ltd [1969] 2 QB 158 313–20, 356 Drane v Evangelou [1978] 2 All ER 437 121 Drive Yourself Hire Co (London) Ltd v Strutt [1954] 1 QB 250 78 Dunbar v A and B Painters Ltd [1986] 2 Lloyd’s Rep 38 335, 337 Dunlop Pneumatic Tyre Co Ltd v New Garage and Motor Co Ltd [1915] AC 79 586, 587 Dunlop Pneumatic Tyre Co Ltd v Selfridge and Co Ltd [1915] AC 847 460, 461 xxv
Sourcebook on Obligations and Remedies Dunlop v Lambert (1839) 6 Cl & F 600 Dunne v North Western Gas Board [1964] 2 QB 806 Dutton v Bognor Regis UDC [1972] 1 QB 373 Dymond v Pearce and Others [1972] 1 QB 496 Eaglesfield v Marquis of Londonderry (1876) 4 Ch D 693 East Ham Corporation v Bernard Sunley and Sons Ltd [1966] 1 AC 406 East Suffolk Rivers Catchment Board v Kent [1941] AC 74 East vMaurer [1991] 1 WLR 461 Electrochrome Ltd v Welsh Plastics Ltd [1968] 2 All ER 205 Elguzouli-Daf v Commissioner of Police of the Metropolis [1995] 1 All ER 833 Eller v Grovecrest Investments Ltd [1994] 4 All ER 845 Elliott Steam Tug Co Ltd v The Shipping Controller [1922] 1 KB 127 ElphickvBarnes (1880) 5 CPD 321 Emeh v Kensington and Chelsea and Westminster Area Health Authority [1985] QB 1012 Emerald Construction Co v Lowthian [1966] 1 WLR 691 Emperor of Austria v Day (1861) 3 DeGF&J 217 Empire Jamaica, The [1955] P 259; [1957] AC 386 English v Dedham Vale Properties [1978] 1 All ER 382 Entores v Miles Far East Corporation [1955] 2 QB 327 Environment Agency (formerly National Rivers Authority) v Empress Car Co (Abertillery) Ltd [1998] 2 WLR 350; [1998] 1 All ER 481 Esso Petroleum Co Ltd v Southport Corporation [1956] AC 218; [1953] 3 WLR 773, CA; [1954] 2 QB 182, QBD
Evans v Glasgow DC 1978 SLT 17, Outer House
463 743 315, 319 196 93, 98, 131, 139, 715, 758 228 195 533 622 696 212, 213 354, 635 83, 268, 482, 483, 774, 789, 839 434, 436, 440
637, 771
8, 67, 99, 100, 117, 119, 120, 137, 216, 218-20, 345, 413, 501, 613, 641, 659, 662, 677, 761, 852 653
F (Mental Patient: Sterilisation), Re [1990] 2 AC 1 FA & AB Ltd v Lupton [1972] AC 634 Falcke v Scottish Imperial Insurance Co (1886) 34 Ch D 234 Ferret v Hill (1854) 15 CB 207 xxvi
460, 461, 464 103, 189 197 761 157
281, 282 18, 183, 188, 423 795 607
Table of Cases Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 Financings Ltd v Stimson [1962] 1 WLR1184 Firstpost Homes Ltd v Johnson [1995] 1 WLR 1567 Fisher v Bell [1961] 1 QB 394 Fitzpatrick v Sterling Housing Association Ltd [1998] Ch 204 Fletcher v Rylands See Rylands v Fletcher Foakes v Beer (1884) 9 App Cas 605 Foaminol Laboratories Ltd v British Artid Plastics Ltd [1941] 2 All ER 393 Forsikringsaktieselskapt Vesta v Butcher [1989] AC 852; [1986] 2 All ER 488 Forster v Silvermere Golf and Equestrian Centre (1981)125 SJ 397 Forth v Simpson (1849) 13 QB 680 Foster v Warblington UDC [1906] 1 KB 648 Fothergill v Monarch Airlines Ltd [1981] AC251 Francis vCockrill (1870) LR5QB501 Francovich v Republic of Italy (Joined Cases C-6/90 and C-9/90) [1995] ICR722 Freeman v Home Office (No 2) [1984] QB 524 Friends’ Provident Life Office v Hillier Parker May and Rowden [1997] QB 85 Frost v Aylesbury Dairy Co Ltd [1905] 1 KB 608
77, 239, 778, 802 163, 433, 487, 492 425, 444, 448 24, 25, 60, 63, 163, 186, 426
GKN Centrax Gears Ltd v Matbro Ltd [1976] 2 Lloyd’s Rep 555 Gainsford v Carroll (1824) 107 ER 516 Geddis v Proprietors of Bann Reservoir (1878) 3 App Cas 430 Geismar v Sun Alliance and London Insurance Ltd [1978]QB 383 General Engineering Services v Kingston & Andrews Corp [1989] 1 WLR 69 Genossenschaftsbank v Burnhope [1995] 1 WLR 1580 George Mitchell (Chesterfield) Ltd v Finney Lock Seeds Ltd [1983] 2 AC 803; [1983] QB284 Gibbon v Mitchell [1990] 1 WLR 1304
xxvii
37, 264
453 327 398 462 374 147, 148 198 547 95 141, 633 239, 620, 780, 792 2, 47, 383, 392, 429, 523
325, 327 357 729 62, 602 660 202, 204, 417 569 265, 267
Sourcebook on Obligations and Remedies Gibson v Manchester CC [1979] 1 WLR 294; [1978] 1 WLR 520, CA Gillingham BC v Medway (Chatham) Dock Co Ltd [1993] QB 343 Gissing v Gissing [1971] AC 886 Gly Mills Currie and Co v East and West India Dock Co (1882) 7 App Cas 591 Gold v Essex CC [1942] 2 KB 293 Goldcorp Exchange Ltd, Re [1995] 1 AC 74 Goldman (Allan William) v Hargrave (Rupert William Edeson) [1967] 1 AC 645 Goodwill v British Pregnancy Advisory Service [1996] 1 WLR 1397 Goodwin v UK (1996) 22 EHRR 123 Gorman v Nudd (1992) (unreported), 15 October, CA (Civil Division) Gorris v Scott (1874) LR 9 Ex 125 Gott vGandy (1853)23LJQB 1 Gouriet v Union of Post Office Workers [1978] AC 435 Grant v Australian Knitting Mills Ltd [1936] AC 85 Greaves & Co Contractors Ltd v Baynham Meikle & Partners [1975] 1 WLR 1095 Green (RW) Ltd v Cade Bros Farm [1978] 1 LI Rep 602 Green v West Cheshire Ry Co (1871) LR 13 Eq 44 Grey v Pearson (1857) 6 HL Cas 61 Grismar v Sun Alliance and London Insurance Ltd [1978] QB 383 Grist vBailey [1967] Ch 532 Groom v Crocker [1939] 1 KB 194 Grosvenor, Re; Peacey v Grosvenor [1944] Ch 138 Groves v Lord Wimbourne [1898] 2 QB 402 Guaranty Trust Co of New York v Hannay and Co [1915] 2 KB 536 H and Others (Minors), Re [1996] 1 All ER 1 Hadley v Baxendale (1854) 156 ER 145; (1854)9Exch 341
Halifax Building Society v Thomas [1996] Ch 217 xxviii
402, 406, 424 679, 680 605 416 732 50, 246, 798, 815 649, 652, 668, 742, 744 191, 694, 722 292 688 354 407 87, 126, 210, 283, 294 180, 182, 345, 547, 685, 718 391, 515, 549, 550 569 256 596 835 496, 497 580 200 759, 760 281, 283 158 237, 296, 326, 339–12, 344, 349, 350, 352, 580, 822 839
Table of Cases Hall vBeckenham Corporation [1949] 1 KB 716 Hall vMeyrick [1957] 2 QB 455 Hall (Inspector of Taxes) vLorimer [1992] 1 WLR 939 Hallett’s Estate, In re; Knatchbull v Hallett (1880) 13 Ch D 696 Hamlin v Great Northern Ry Co (1856) 1 H & N 408 Hancock v Brazier (BW) (Anerley) [1966] 1 WLR 1317 Hannah Blumenthal, The [1983] 1 AC 854 Harbour Assurance Ltd v Kansa General Insurance Co [1993] QB 701 Harbutts ‘Plasticine’ Ltd v Wayne Tank and Pump Co [1970] 1 QB 447 Hardwick Game Farm v Suffolk Agricultural Poultry Producers Association [1969] 2 AC 31 Hargrave v Goldman (1963) 110CLR40 Harmer vBell (1851) 7 Moo PC 267 Harnett v Bond [1925] AC 669 Harris v Watson (1791) Peake 72 Haseldine v CA Daw and Son Ltd [1941] 2 KB 343 Haynes v Harwood [1935] 1 KB 146 Hazell v Hammersmith and Fulham LBC [1992] 2 AC 1 Heap v Ind Coope and Allsopp Ltd [1940] 2 KB 476 Heaven vPender (1883) 11 QBD 503 Hedley Byrne & Co v Heller & Partners [1964] AC 465
Heil vHedges [1951] 1 TLR 512 KB Heilbut Symons & Co v Buckleton [1913] AC 30 Helby v Matthews [1895] AC 471 Henderson v Jenkins (Henry E) & Sons and Evans [1970] AC 282 Henderson v Merrett Syndicates Ltd [1995] 2 AC 145 Herbert Clayton and Jack Waller Ltd v Oliver [1930] AC 209 Hern vNichols (1701) 1 Salk 289 Heron II, The See Koufos v Czarnikow (C); Heron II, The xxix
44 337 188, 192 21 298 392 16, 423 162, 185, 204 308 345 738 370 137, 352 451 722 637, 560, 651, 653 70, 75, 812, 819 676 66, 641 124, 195, 383, 436, 466, 470, 473, 488, 694, 704, 708-10, 721, 724, 725, 743, 831 531 467 581, 582 547, 765, 766 353, 612, 703, 714, 719, 724, 731, 735, 736 325 82
Sourcebook on Obligations and Remedies Herrington v British Railways Board See British Railways Board v Herrington Heywood v Wellers (A Firm) [1976] QB 446 Hickman vPeacey [1945] AC 304 Hicks v Chief Constable of the South Yorkshire Police [1992] 2 All ER 65 Hill v Chief Constable of West Yorkshire [1989] AC 53 Hill v Parsons (CA) & Co Ltd [1972] 1 Ch 305 Hillesden Securities v Ryjack [1983] 1 WLR 959 Hobbs v London & South Western Ry Co (1875) LR QB 111 Hoecheong Products Ltd v Cargill Ltd [1995] 1 WLR 404 Hoenigv Isaacs [1952] 2 All ER 176 Hollywood Silver Fox Farm v Emmett [1936] 2 KB 468 Holmes v Hall (1704) 6 Mod Rep 161 Holmes v Mather (1875) LR 10 Exch 261 Home Office v Dorset Yacht Co [1970] AC 1004
Hong Kong Fir Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26 Hopkins v Tanqueray (1854) 139 ER 369 Horrocks v Lowe [1975] AC 135 Hotson v East Berkshire Health Authority [1987] AC 750 Howe v David Brown Tractors (Retail) Ltd [1991] 4 All ER 30 Howe v Smith (1884) 27 Ch D 89 Howes v Bishop [1909] 2 KB 390 Hua Lien, The [1991] 1 Lloyd’s Rep 309 Hudson’s Concrete Products Ltd v Evans (DB) (Bilston) Ltd (1961)105 SJ 281 Hughes v Lord Advocate [1963] AC 837 Hughes v Metropolitan Ry Co (1877) 2 App Cas 439 Hunter v Canary Wharf Ltd [1997] AC 655
xxx
579 4 152 90, 95, 98, 138-40, 715, 718, 731, 732, 734, 749, 757 201 332 298 119 226, 227, 518 774 778 216 58, 69, 104, 138, 141, 177, 182, 270, 343, 520, 645, 647, 649, 650, 654, 711, 727, 729, 738, 739, 741, 752, 754 573, 577 403, 405, 406, 466, 468, 469 685 339 623, 625 836 259 721 8 346, 627, 629 453 143, 309, 614, 655, 657, 681
Table of Cases Hussain v Lancaster CC [1999] 2 WLR 1142 Hyman v Nye (1881) 6 QB 685
655, 658, 757 131, 392, 393, 523, 530, 545, 547
IBL Ltd v Coussens [1991] 2 All ER133 ICI v Shatwell [1965] AC 656 ICS v West Bromwich BS [1998] 1 WLR 896 Ingham v Ernes [1955] 2 QB 366 Ingram v Little [1961] 1 QB 31 Inland Revenue Commissioners v Hambrook [1956] 2 QB 641 Interfoto Picture Library Ltd v Stiletto Visual Programmes Ltd [1989] QB 433 Inverugie Investments Ltd v Hackett [1995] 1 WLR 713 Isenberg v East India House Estate Co Ltd (1863) 3 De GJ & S 263 Island Records, ex p [1978] Ch 122
315, 329 638 418 532, 533, 577, 610 789
Jackson v Horizon Holidays Ltd [1975] 1 WLR 1468
Jackson v Union Marine Insurance Co Ltd (1873) LR 8 CP 572 Jacobs v Seward (1872) LR 5 App Cas 464 Jaggard v Sawyer [1995] 2 All ER 189 James v South Western Ry Co (1872) LR 7 Ex 287 Jarvis v Swans Tours Ltd [1973] 1 QB 233 Jasperson v Dominion Tobacco Co [1923] AC 709 Jervis v Harris [1996] Ch 195 Jobson v Johnson [1989] 1 WLR 1026 John vMGM Ltd [1997] QB 586 Johnson v Agnew [1980] AC 367 Johnson v The King [1904] AC 817 Jolley vSuttonLBC [1998] 1 WLR 1546 Jones (RE) Ltd v Waring & Gillow Ltd [1926] AC 670 Jones v Ffestiniog Ry Co (1868) LR 3 QB 733 Jones v National Coal Board [1957] 2 QB 55 Jones v Page (1867) 15 LT 619 Jones v Vernon’s Pools Ltd [1938] 2 All ER 626 Jorden v Money (1854) 5 HL Cas 185 xxxi
195 409, 413, 432, 515, 774 310, 329, 839 255 38, 40, 125, 209 37, 38, 193, 209, 215, 220, 305, 459, 465, 710 575 116 361 369 297, 305, 539, 580, 616 696 230 584 4, 311, 685 315, 460 811 173, 350, 360, 626 778, 780 100 5 530 430, 572 455, 456
Sourcebook on Obligations and Remedies Junior Books Ltd v Veitchi Co Ltd [1983] AC 520 Jupiter,The [1924] P 236
653 371
KD, Re (A Minor) [1988] AC 806 Kelly vSolari(1841)9M&W 54 Kennedy v Panama, New Zealand and Australian Royal Mail Co Ltd (1867) LR 2 QB 580 Keppel Bus Co Ltd v Sa’ad bin Ahmad [1974] 2 All ER 700
125 778
Khorasandjian v Bush [1993] QB 727
King v Liverpool City Council [1986] 1 WLR 890 King v Phillips [1953] 1 QB 429 King, Ex p [1954] 3 All ER 897 Kingdom of Spain v Christie, Manson & Woods Ltd [1986] 1 WLR 1120 Kirkham v Boughey [1958] 2 QB 338 Kirklees Metropolitan BC v Wickes Building Supplies Ltd [1993] AC 227 Kitchen v Royal Air Force Association [1958] 1 WLR 563 Kleinwort Benson v Birmingham CC [1997] QB 380 Kleinwort Benson v Glasgow CC [1996] QB 678; [1999] 1 AC 153 Kleinwort Benson v Lincoln CC [1998] 3 WLR 1095 Kleinwort Benson v Sandwell BC See Westdeutsche Landesbank v Islington LBC Kleinwort Benson v South Tyneside Metropolitan BC [1994] 4 All ER 972 Knightley v Johns [1982] 1 WLR 349 Knights v Wiffen (1870) LR 5 QB 660 Knuller Ltd v DDP [1973] AC 435 Kopitoff v Wilson (1876) 1 QBD 377 Koufos v Czarnikow (C); Heron II, The [1969] 1 AC 350 Koursk, The [1924] P 140 Krell v Henry [1903] 2 KB 740 xxxii
496 35, 537, 541, 543, 554, 647, 659, 660 38, 141, 147, 148, 150–52, 154, 155, 279, 613, 616, 640, 774 653 195 200 51, 117, 118, 187, 201, 209, 215, 613 195, 634 95 334, 337 70, 106, 777, 780, 799, 823 64, 71, 107, 799, 823, 834, 850 13, 21, 107, 158, 823, 832, 850 824
811 90 247 15, 16, 123 14 340, 343, 344, 346, 350 622 591, 592
Table of Cases Lamb v Camden LBC [1981] QB 625 Lavarack v Woods of Colchester Ltd [1967] 1 QB 278 Lazenby Garages Ltd v Wright [1976] 1 WLR 459 Leaf v International Galleries (A Firm) [1950] 2 KB 86 Leigh and Sillivan Ltd v Aliakmon Shipping Co Ltd; Aliakmon, The [1985] QB 350; [1986] AC 785 Leslie (R) Ltd v Sheill [1914] 3 KB 607 Letang vCooper [1965] 1 QB 232 Lewis vAveray [1972] 1 QB 198 Liddesdale, The [1900] AC 190 Liesbosch Dredger Edison, The [1933] AC 449 Lillicrap vNalder and Son [1993] 1 WLR 94 Lim Poh Choo v Camden and Islington Area Health Authority [1980] AC 174 Linden Gardens Trust v Lenesta Sludge Disposals Ltd [1994] AC 85 Lion Natham Ltd v CC Bottlers Ltd (1996) The Times, 16 May Lipkin Gorman v Karpnale [1991] 2 AC 548
Lippiatt v South Gloucestershire Council [1999] 3 WLR 137 Lister v Romford Ice & Cold Storage Co Ltd [1957] AC 555 Liverpool CC v Irwin [1977] AC 239 Livingstone v Rawyards Coal Co (1880) 5 App Cas 25 Lloyd v Grace, Smith & Co [1912] AC 716 Lloyd’s v Harper (1880) 16ChD290 Lloyds Bank Ltd vBundy [1975] QB 326 Lock International v Beswick [1989] 1 WLR 1268 Lockett v A & M Charles Ltd [1938] 4 All ER 170 London Steam Tranways Co Ltd v London CC [1898]AC 375 London, Chatham and Dover Ry v South Eastern Ry [1892] 1 Ch 120, CA; [1893] AC 429
xxxiii
653 437 113, 578 477, 479 654, 706 818 68, 80, 116, 609, 623 501, 503, 798 307 349 336 17 156, 157, 460, 463, 464, 707, 708, 710 357 40, 70, 78, 79, 124, 245, 780, 782, 789, 790, 797, 798, 811, 823, 827, 850, 851
658, 757 77, 270, 534, 577, 614, 615, 793 515 294, 318 81 221, 460 500 296, 4210 161, 392, 465 15 237, 267, 822
Sourcebook on Obligations and Remedies Lonrho Ltd v Shell Petroleum Co Ltd (No 2) [1982] AC 173 Lonrho plc v Fayed (No 5) [1993] 1 WLR 1489 Lonrho plc vTebbit [1991] All ER 973 Lord Napier and Ettrick v Hunter [1993] AC 713 Lumley v Gye (1853) 2E & B 216; 118 ER 749 Lumley v Wagner (1852) 1 De GM & G 604; 42 ER 687 Lupton v FA & AB Ltd See FA & AB Ltd v Lupton McCance v L & NW Ry (1861) 31 LJ Exch 65 McCarey v Associated Newspapers Ltd (No 2) [1965] 2 QB 86 McCormick vGrogan (1869) LR 4 HL 82 McDermid v Nash Dredging and Reclamation Co Ltd [1987] AC 906 McGhee v National Coal Board [1973] 1 WLR 1 M’Intosh v Great Western Ry See Mackintosh v Great Western Ry Co Mackintosh v Great Western Ry Co (1865) 4 Giff 683 McLoughlin vO’Brian [1983] AC 410 Macmillan Inc v Bishopsgate Investment Trust plc (No 3) [1995] 1 WLR 978,ChD; [1996] 1 WLR 387, CA McNaughton (James) Papers Group Ltd v Hicks Anderson Co [1991] 2 QB 113 McRae v Commonwealth Disposals Commission (1951) 84 CLR 377 Mc Williams v Sir William Arrol and Co Ltd [1962] 1 WLR 295 Maciej Rataj, The (The Tatry) (Case C-406/92) [1995] 1 Lloyd’s Rep 302 Mafov Adams [1970] 1 QB 548 Magee v Pennine Insurance Co Ltd [1969] 2 QB 507 Mahmud v BCCI [1998] AC 20 Mahoney vPurnell [1996] 3 All ER 61 Malone v Laskey [1907] 2 KB 141 Manchester Airport plc v Dutton [1999] 3 WLR 524 Mannai Investment Co v Eagle Star Life Assurance [1997] AC 749 Mansfield v Weetabix Ltd [1998] 1 WLR 1263 Mapp v News Group Newspapers [1998] QB 520 xxxiv
760 324 754 815 695, 696 695
405 687 818 732 158, 161, 338
267 743 796 726 497 333 372 61 496 311, 322 483 147–49, 152 46 418 763 97
Table of Cases Marc Rich and Co v Bishop Rock Marine Co Ltd [1996] 1 AC 211 Mareva Compania Naviera SA v International Bulk Carriers [1980] 1 AllER 213 Margarine Union Gmbh v Cambay Prince Steamship Co (The Wear Breeze) [1969] 1 QB 219 Martin Peters Bau-unternehmung GmbH v Zuid Nederlandse Aannemers Vereniging (Case 34/82) [1983] ECR 987 Martin v Watson [1996] AC 74 May and Butcher Ltd v R [1934] 2 KB 17 Mediana (Owners of Steamship) v Comet (Owners of Lightship), Mediana, The [1900] AC 113 Mercedes Benz AG v Leiduck [1996] 1 AC 284 Merchant Prince, The [1892] P 179 Mercury Communications Ltd v Director General of Telecommmunications [1996] 1 WLR 48 Merlin v British Nuclear Fuels [1990] 2 QB 557 Mersey Docks and Harbour Board Trustees v Gibbs (1866) LR 1 HL 93 Meux v Great Eastern Ry [1895] 2 QB 387 MGFM Asia Ltd v Securities Commission [1995] 2 AC 500 Midland Bank Trust Co Ltd v Hett, Stubbs and Kemp (A Firm) [1979] Ch 384 Midland Silicones v Scruttons, See Scruttons v Midland Silicones Miliangos v George Frank (Textiles) Ltd [1976] AC 443 Miller v Jackson [1977] QB 966 Miller v Stapleton [1996] 2 All ER 449 Ministry of Defence v Ashman [1993] 2 EGLR 102 Ministry of Health v Simpson [1975] AC 251 Ministry of Housing v Sharp [1970] 2 QB 223 Mint v Good [1951] 1 KB 517 Mitchell v Baling LBC [1979] QB 1 Mogul SS Co vMcGregor,Gow&Co [1892] AC 25 Montagu’s Settlements, Re; Duke of Manchester v National Westminster Bank [1987] Ch 264 Moorcock, The (1889) 14 PD 64 xxxv
136, 366, 694, 711, 722 273, 274 195
71, 75 699 444 190, 330 117, 219, 273 100 85 685 739 80 36 703
10, 12, 383 35, 51, 56, 133–35, 278, 280, 365, 580, 614, 659, 674 415 329 788 97 10, 62, 613, 675, 677 352 699 243 375, 494, 512
Sourcebook on Obligations and Remedies Moorgate Mercantile Co Ltd v Twitchings [1976] QB 225; cf [1977] AC 890 Morgan Guaranty Trust of New York v Lothian Regional Council 1995 SC 151 Morgan v Fry (1966) The Times, 27 October Morgan v Oldhams Press [1971] 2 All ER 1156 Morgans v Launchbury [1973] AC 127; [1971] 2 QB 245 Morris v Ford Motor Co, Cameron Industrial Services (Third Party), Roberts (Fourth Party) [1973] 1 QB 792 Morris v Martin (CW) & Sons Ltd [1966] 1 QB 716 Morris v Murray [1991] 2 QB 6 Morrison Steamship Co Ltd v Greystoke Castle (Cargo Owners) [1947] AC 265 Morton v Wheeler (1956) The Times, 1 February, CA Moschi vLep Air Services Ltd [1973] AC 331 Moses v Macferlan (1760) 2 Burr 1005; 97 ER 676 Moule vGarrett (1872) LR 7Exch 101 Muirhead v Industrial Tank Specialists Ltd [1986] QB 507 Murphy v Brentwood DC [1991] 1 AC 398 Murray vFoyle Meats Ltd [1999] 3 WLR 356 (NI) Myers (GH) & Co v Brent Cross Service Co [1934] 1 KB 46 NWL Ltdv Woods [1979] 1 WLR 1294 National Bank of Greece SA v Pinios Shipping Co (No 1) [1990] 1 AC 637 National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675 National Telephone Co v Baker [1893] 2 Ch 186 National Westminster Bank v Morgan [1985] AC 686 Naylor v Preston Area Health Authority [1987] 1 WLR 958 Nettleship v Weston [1971] 2 QB 691 New Zealand Shipping Co Ltd v AM Satterthwaite & Co Ltd; Eurymedon, The [1975] AC 154, PC New Zealand Shipping Co Ltd v Société des Ateliers et Chantiers de France [1919] AC 1 News of the World Ltd v Friend [1973] 1 All ER 422 Nichol v Attorney General for the State of Victoria [1982] VR 353 Nocton v Lord Ashburton [1914] AC 932
xxxvi
457 23 696, 697 692 766 270, 536, 615, 793 80, 82, 83, 458, 541, 542, 660 353 195 762 62, 381 70, 779, 811 790 722 24, 25, 106, 709, 721 207 532 17 803 187 183 84, 505 623 638, 764, 765 199, 465 696 201 94 469, 472, 721
Table of Cases Nor-Video Services Ltd v Ontario Hydro (1978) 84 DLR (3d) 221 Nordglimt, The [1988] QB 183 North London Ry Co v Great Northern Ry Co (1883) 11 QBD 30 North Ocean Shipping Co Ltd v Hyundai Construction Co Ltd [1979] QB 705 Northcote v Owners of the Henrich Björn (1886) 11 App Cas 270 Norton Tool Co Ltd v Tewson [1973] 1 WLR 45 Norweb plc v Dixon [1995] 1 WLR 636 Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133 Nurdin and Peacock plc v DBN Ramsden and Co Ltd [1999] 1 WLR 1249 O’Leary v London Borough of Islington (1983) 9 HLR 81 Orakpo v Manson Investments Ltd [1978] AC 95 O’Reilly vMackman [1983] 2 AC 237 Oropesa, The [1943] P 32 Oscar Chess v Williams [1957] 1 WLR 370 Osman v Ferguson [1993] 4 All ER 344 Osman v UK (1998) 5 BHRC 293; (1998) The Times, 5 November Otter v Church, Adams, Tatham and Co [1953] Ch 280 Overseas Tankship (UK) Ltd v Miller Steamship Co Pty (The Wagon Mound (No 2)) [1967] 1 AC 617 Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co (The Wagon Mound (No 1)) [1961] AC 388 Overstone v Shipway [1962] 1 WLR 117 Owen v Tate [1975] 2 All ER 129 Owens v Liverpool Corporation [1939] 1 KB 394 P (Minors) (Custody Order: Penal Notice), Re [1990] 1 WLR 613 Pacific Associates Inc v Baxter [1990] 1 QB 993 Pao On v Lau Yiu Long [1980] AC 614
xxxvii
145, 153 372 274 450 370 327 88, 737 219, 287, 292 832 656 268, 269, 849, 851 85 622 467 749–51 131, 139, 749 337 345, 669 319, 345, 352, 627–29, 633, 636, 669 235 791 519
271 715 450, 451
Sourcebook on Obligations and Remedies Parish v Judd [1960] 1 WLR 867 Parker v British Airways Board [1982] QB 1004 Parker v South Eastern Ry Co (1877) 2 CPD 416 Parry v Cleaver [1970] AC 1 Parsons (H) (Livestock) Ltd v Uttley Ingham & Co [1978] QB 791 Pasley v Freeman (1789) 3 Durn E 51; 100 ER 450 Patel v Patel [1988] 2 FLR 179 Peek v Deny See Deny v Peek Peek v Gurney (1873) LR 6 HL Pepper (Inspector of Taxes) v Hart [1993] AC 593 Perl (P) (Exporters) Ltd v Camden LBC [1984] QB 342 Pharmaceutical Society of Great Britain v Boots Cash Chemist (Southern) [1953] 1 QB 401 Phelps v Hillingdon LBC [1997] 1 WLR 500 Phillips v Britannia Hygienic Laundry Co Ltd [1923]2 KB 832 Photo Production Ltd v Securicor Transport Ltd [1980] AC 827 Piller (Anton) KG v Manufacturing Processes Ltd [1976] 1 All ER 779 Pinnel’s Case (1602) 5 Co Rep 117a; 77 ER 237 Pitt v PHH Asset Management Ltd [1994] 1 WLR 327 Poland v Parr (John) & Sons [1927] 1 KB 236 Poole v Smith’s Car Sales (Balham) Ltd [1962] 1 WLR 744 Poussard v Spiers & Pond (1876) 1 QBD 410 Powell v Fall (1880) 5 QBD 597 Powstaniec Wielkolposki, The [1989] QB 279 Practice Direction (Court of Appeal (Civil Division)) [1999] 1 WLR 1027 Practice Statement (Judicial Precedent) [1996] 1 WLR 1234 Preist v Last [1903] 2 KB 148 Prenn v Simmonds [1971] 1 WLR 1381 President of India v La Pintada Compania NavigacionSA [1985] AC 104 Price vStrange [1978] Ch 337 Printing and Numerical Registering Co v Sampson (1875) LR 19Eq 462 xxxviii
762 43 410 193 202, 342, 350, 361 318 142
469 475 560 426 754 758, 760 270, 353, 408, 432, 541, 552, 554, 570, 660 274–76 453 442, 443, 446 537 533, 853 695 100 107 8 15, 806, 807 48 418 800 251, 253 124, 407
Table of Cases Qualcast (Wolverhampton) Ltd v Haynes [1959] AC 743 Quinn v Leathern [1910] AC 495 R v Barnet Magistrates’ Court ex p Cantor [1999] 1 WLR 334 R v Bow Street Magistrates ex p Pinochet (No 2) [1999] 2 WLR 272 R v Central Independent Television plc [1994] 3 WLR 20 R v Chief Constable of Sussex ex p International Trader’s Ferry Ltd [1998] 3 WLR 1260 R v Commissioner of Police of the Metropolis ex p Blackburn [1968] 2 QB 118 R v Cunningham [1982] AC 566 R v Deputy Governor of Parkhurst Prison ex pHague [1992] 1 AC58 R vDytham [1979] QB 722 R vGhosh [1982] QB 1053 R v Kelly [1999] 2 WLR 384 R v Leeds County Court ex p Morris [1990] 2 WLR 175 R vLewishamLBC ex p Shell UK [1978] 1 All ER 938 R v McDonald (1885) 15QBD 323 R v Secretary of State for Education and Science ex p AvonCC (No 2) [1991] 1 QB 558 R v Self [1992] 1 WLR 657 R v Somerset CC ex pFewings [1995] 1 WLR 1037 R vSpurge [1961] 2QB 205 R v West Sussex Quarter Sessions [1973] 3 All ER 289 R v Young R v Secretary of State for the Environment ex p Nottinghamshire CC [1986] AC 240 RCA Corporation v Pollard [1983] Ch 135 Racz v Home Office [1994] 2 AC 45 Radford v De Froberville [1977] 1 WLR 1262 Raineri vMiles [1981] AC 1050 Rainham Chemical Works Ltd v Belvedere Fish Guano Co Ltd [1921] 2 AC 465 Ramsden v Dyson (1886) LR 1 HL 129 Rantzen v Mirror Group Newspapers (1986) Ltd [1994] QB 670 xxxix
13, 157 696
367, 369 536 129, 293 752 91 20 728 90 844 38 10 90, 440 80 59 187, 224 85 764 215 5 747 213 647 302, 303 523 199, 671 457 688, 689
Sourcebook on Obligations and Remedies Read v J Lyons & Co [1947] AC 156
12, 68, 101, 103, 187, 192, 199, 383, 662, 667, 670, 671, 673, 674, 760 65, 543, 546, 547 85
Readhead v Midland Ry (1869) LR 4 QB 379 Reading v R[1949]2 KB 232 Reardon Smith Line Ltd v Yngvar Hansen-Tangen (trading as HE Hansen-Tangen) [1976] 1 WLR 989 418, 596 Redgrave v Hurd (1881) 20 Ch D 1 264, 265, 360, 476 Reed v Dean [1949] 1 KB 188 530, 577, 590, 602, 853 Reeves v Commissioner of Police of the Metropolis [1999] 3 WLR 363 360, 631, 641, 758, 770 Regalian Properties plc v London Dockland Development Corporation [1995] 1 WLR 212 445, 446 Reid v Rush & Tompkins plc [1990] 1 WLR 212 416, 514, 536, 614 Republic of Haiti v Duvalier [1990] 1 QB 202 789 Republic of India v India Steamship Co (No 2) [1998]AC 878 369 Revill v Newbery [1996] QB 567 224 Reynolds v Times Newspapers Ltd [1998] 3 WLR 862; (1999) Internet Transcript, HL 691, 692, 775–76 Richardson v Mellish (1824) 2 Bing 229 337 Rickards v Lothian [1913] AC 263 188, 668, 672 Rigby v Chief Constable of Northamptonshire [1985] 1 WLR 1242 90, 98, 613, 614, 655, 757 Riverplate Properties Ltd v Paul [1975] Ch 133 266 Roberts (A) & Co Ltd v Leicestershire CC [1961] Ch 555 265, 266 Roberts Petroleum Ltd v Bernard Kenny Ltd [1983] AC 192 8, 122 Roberts v Ramsbottom [1980] 1 WLR 823 763, 764 Robinson v Harman (1848) 1 Exch 850 301 Roe v Minister of Health [1954] 2 QB 66 189, 393, 395, 722, 732 Rogers v Night Riders (A Firm) [1983] RTR 324 539 Rondel v Worsley [1969] 1 AC 191 92, 718 Rookes v Barnard [1964] AC 1129 17, 142, 310, 454, 697, 838 Ross v Caunters (A Firm) [1980] Ch 297 107, 108, 702–04, 708 Ross v Fedden (1872) 26 LT 966 667 Rover International Ltd v Canon Films Ltd [1989] 1 WLR 912 790
xl
Table of Cases Rowe v Herman [1997] 1 WLR 1390 Rowland v Divall [1923] 2 KB 500 Rowland, Re; Smith v Russell [1963] 1 Ch 1 Rowling v Takaro Properties Ltd [1988] AC 473 Roy v Kensington and Chelsea and Westminster Family Practitioner Committee [1992] 1 AC 624 Royal Brunei Airlines Sdn Bhd v Tan [1995] 2 AC 378 Royscot Trust Ltd v Rogerson [1991] 2 QB 297 Ruben v Great Fingall Consolidated [1906] AC 439 Rutter v Palmer [1922] 2 KB 87 Ruxley Electronics and Construction Ltd v Forsyth [1996] 1 AC 344 Rylands v Fletcher (1868) LR 3 HL 330; (1866) LR 1 Exch 265
659, 677 236, 237, 782, 789, 790 33, 166, 167, 188, 204 731, 747, 755 88, 116 797, 823, 842 317, 320, 321 82 471 239, 301, 307–10, 321,360, 581 68, 98, 100, 101, 125, 144, 183, 188, 189, 199, 660, 662, 664–73
S (Hospital Patient: Court’s Jurisdiction), Re [1995] 3 WLR 78 Samuels v Davis [1943] KB 526 Saunders v Anglia Building Society, sub nom Gallic v Lee [1971] AC 1004 Sayers vHarlowUDC [1958] 1 WLR 623 Scally v Southern Health and Social Services Board [1992] 1 AC 294 Schering Agrochemicals Ltd v Resibel NV SA (1992) unreported, 26 November, CA (Civil Division) Transcript No 1298 of 1992; noted in (1993) 109 LQR 175 Schuler (L) AG v Wickman Machine Tools Sales Ltd [1974] AC 235 Scott v Brown, Doering, McNab and Co [1892] 2 QB 724 Scott v Shepherd (1773)3 Wils 403; 96 ER 525 Scottish Co-operative Wholesale Society Ltd vMeyer [1959] AC 324 Scruttons v Midland Silicones [1962] AC 446 Sedleigh-Denfield v O’Callaghan [1940] AC 880 Sheikh Bros Ltd v Ochsner [1957] AC 136
xli
281 392 499 398 326, 414, 415
398 419, 420, 577 608 637 580 80, 460, 720 217, 218, 655, 668 496
Sourcebook on Obligations and Remedies Shelfer v City of London Electric Lighting Co [1895] 1 Ch 287 Shepherd (FC) & Co v Jerrom [1986] 3 All ER 589 Shirlaw v Southern Foundries (1926) Ltd [1939] 2 KB 206 Simon v Pawson and leafs Ltd (1932) 38 Com Cas 151 Simpson & Co v Thomson (1877) LR 3 App Cas 279 Sinclair v Brougham [1914] AC 398
Singh v Ali [1960] AC 167 Siskina, The [1979] AC 210 Slomanv Walter (1784) 1 BroCC 418 Smith and Snipes Hall Farm v River Douglas Catchment Board [1949] 2 KB 500 Smith Kline French Laboratories Ltd v Long [1989] 1 WLR 1 Smith New Court Securities Ltd v Scrimgeour Vickers Ltd [1997] AC 254 313, Smith vChadwick (1882) 20 ChD 27 Smith v Eric S Bush [1990] 1 AC 831 Smith vHughes (1871) LR 6QB 597 Smith v Littlewoods Organisation Ltd [1987] AC 241, HL (Scotland) Smith v Scott [1973] Ch 314 Snelling v Whitehead (1975) The Times, 31 July Société Anonyme de Remorquage a Hélice v Bennetts [1911] 1 KB 243 Solholt, The See Sotiros Shipping Inc v Schmeiet Solholt Solle v Butcher [1950] 1 KB 671 Sotiros Shipping Inc v Schmeiet Solholt, The Solholt [1983] 1 LI Rep 605 359 Southcote’s Case (1601) 4 Co Rep 836; 76 ER 1061 Southport Corporation v Esso Petroleum Co Ltd See Esso Petroleum Co Ltd v Southport Corporation Spartan Steel Alloys Ltd v Martin & Co (Contractors) Ltd [1973] QB 27 Spring v Guardian Assurance plc [1995] 2 AC 296
362, 365 590 494 346 195 12, 64, 240, 779, 780, 799, 801, 803–07, 812, 817, 821,822 608 274 585 78 319 470 469 200, 736 416, 488, 490 14, 647, 655, 657, 674 656, 659 764 195
478, 485, 487, 496, 498
458
192, 194, 197, 294, 297, 307, 344, 625, 711 97, 122, 123, 327, 335, 337, 693
xlii
Table of Cases St George’s Healthcare Trust vS [1999] Fam 26 St Helen’s Smelting Co v Tipping (1865) 11 HL Cas 642 St John Shipping Corporation v Joseph Rank Ltd [1957] 1 QB 267 St Martin’s Property Corporation Ltd v Sir Robert McAlpine Ltd [1994] AC 85 Staffordshire Area Health Authority v South Staffordshire Waterworks [1978] 1 WLR 1387
633 310 603 460, 461, 464 89, 90, 202, 380, 418, 595, 599, 600 636,
Stansbie v Troman [1948] 2 KB 48 650 Stapely v Gypsum Mines Ltd [1953] AC 663 638 State of Norway’s Application (Nos 1 and 2), Re [1987] QB 433, CA; [1990] 1 AC 723, HL 58, 85 Staveley Iron & Chemical Co Ltd v Jones [1956] AC 627 659 Stears v South Essex Gas-Light & Coke Co (1861) 30 LJCP 49 405 Stedman v Swan’s Tours (1951) 95 SJ 727 299 Sterman v EW & WJ Moore Ltd [1970] 1 QB 596 118 Stevenson v Beverley Bentinck Ltd [1976] 1 WLR 483 400, 401, 798 Stewart Gill Ltd v Horatio Myer Co Ltd [1992] QB 600 229 Stewart v Reavell’s Garage [1952] 2 QB 545 532, 539 Stilk v Myrick (1809) 2 Camp 317; 170 ER 1168 450-52 Stockloser v Johnson [1954] 1 QB 476 836, 837 Stocks v Magna Merchants Ltd [1973] 2 All ER 329 190 Stocks v Wilson [1913] 2 KB 235 818 Stoke-on-Trent City Council v W & J Wass Ltd [1988] 1 WLR 1406 126, 330 Stovin v Wise [1996] AC 923 104, 367, 645, 656, 737, 748, 749, 763 Strand Electric and Engineering Co Ltd v Brisford Entertainments Ltd [1952] 2 QB 246 296, 332 Stratford (JJ) & Son Ltd v Lindley [1965] AC 307 454, 696-98 Stubbings v Webb [1993] AC 498 68, 383 Sturges v Bridgman (1879) 11 Ch D 852 52 Sumpter v Hedges [1898] 1 QB 673 519, 793, 835 Supply of Ready Mixed Concrete (No 2), Re [1995] 1 AC 456 36
xliii
Sourcebook on Obligations and Remedies Surrey CC v Bredero Homes Ltd and Mole DC [1993] 1 WLR 1361
Sutcliffe v Pressdram Ltd [1991] 1 QB 153 Swain v The Law Society [1983] 1 AC 598 Swingcastle Ltd v Alastair Gibson [1991] 2 AC 223 Swinney v Chief Constable of Northumbria [19997] QB 464 Swordheath Properties Ltd v Tabet [1979] 1 WLR 285 Sykes v Midland Bank Executor and Trustee Co Ltd [1971] 1 QB 113 TSB Bank plc v Camfield [1995] 1 WLR 430 Talbot v Berkshire CC [1994] QB 290 Tappenden v Artus [1964] 2 QB 185 Tarry v Ashton (1876) 1 QBD 314 Tasmania (Owners of) v City of Corinth (Owners of) (1890) 14 App Cas 223 Taylor v Caldwell (1863) 3 B & S 826; 122 ER 309 Taylor v Chester (1869) LR 4 QB 309 Taylor v Plumer (1815) 3 M & S 562; 105 ER 721 Techno-Impex v Gebr Van Weelde Scheepvaartkantoor BV [1981] 1 QB 648 Tennant Radiant Heat Ltd v Warrington Development Corporation [1988] 1 EGLR 41 Teno, The See Cia Sud Americana de Vapores v Shipmair BV; Teno, The Tervaete,The [1922] P 259 Tesco Supermarkets Ltd v Nattrass [1972] AC 153 TH Knitwear (Wholesale) Ltd [1988] Ch 275 Thake v Maurice [1986] QB 644 Thomas Bates & Son Ltd v Wyndham’s (Lingerie) Ltd [1981] 1 WLR 505 Thomas v Countryside Council for Wales [1994] 4 All ER 853
xliv
135, 222, 295, 297, 332, 362, 578, 778, 782, 790, 838, 839 688, 689, 691 462, 463 356 137, 141, 758 330 336 479, 509, 510 622 373, 459 218, 675 120 496, 588, 591, 592, 853 607 241, 783 55 398
371 33, 36, 37, 711 269 65, 395, 547, 550, 622, 722, 725 265, 503 358
Table of Cases Thomas v National Union of Mineworkers (South Wales Area) [1976] Ch 20 Thompson (WL) v Robinson (Gunmakers) Ltd [1955] Ch 177 Thompson-Schwab vCostaki [1956] 1 WLR 335 Thomson (DC) & Co Ltd v Deakin [1952] Ch 646 Thorne v Motor Traders Association [1937] AC 797 Thornton v Shoe Lane Parking Ltd [1971] 2 QB 163 Tinsley v Milligan [1994] 1 AC 340 Tojo Maru, The [1972] AC 243 Tolstoy Miloslavsky v UK (1995) 20 EHRR 442 Topp v London County Bus Ltd [1993] 1 WLR 976 Torquay Hotel Co v Cousins [1969] 2 Ch 106 Town Investments Ltd v Department of the Environment [1978] AC 359 Treseder-Griffin v Co-operative Insurance Society [1956] 2 QB 127 597 Turnbull & Co v Duval [1902] AC 429 Tweedle v Atkinson (1861) B & S 393; 121 ER 762 United Australia Ltd v Barclays Bank Ltd [1941] AC 1 United Dominions Trust (Commercial) Ltd v Eagle Aircraft Services Ltd [1968] 1 WLR 74 Universal Cargo Carriers Corporation vCitati (No 2) [1958] 2 QB 254 University of Nottingham vEyett [1999] 2 All ER 437 Vacwell Engineering Co Ltd v BDH Chemicals Ltd [1971] 1 QB 88 Van den Boogaard v Laumen [1997] 3 WLR 284 Van Toll v SE Ry (1862) 31 LCJP 241 Victoria Laundry (Windsor) Ltd v Newman Industries Ltd [1949] 2 KB 528 Vigers v Cook [1919] 2 KB 475 Viscount de L’Isle v Times Newspaper, See De L’Isle (Viscount) v Times Newspaper
xlv
280 579 145 696,697 508 410, 411 604, 835, 840 366, 367, 719, 720 690 538 695 59,86
258–60 461 239, 779, 781 384, 385 574 413, 416
300 38 407 344 65, 226–28, 512, 516,522, 523
Sourcebook on Obligations and Remedies Wadsworth v Lydall [1981] 1 WLR 598 237, 822 Wagon Mound (No 1), The See Overseas Tankship (UK) Ltd v Morts Dock & Engineering Co Walford v Miles [1992] 2 AC 128 413, 440, 442 Walkin v South Manchester Health Authority [1995] 1 WLR 1543 621 Wall v Silver Wing Surface Arrangements Ltd (unreported) 539–41 Wallis v Smith (1882) 21 Ch D 243 583 Wallis, Son & Wells v Pratt & Haynes [1911] AC 394 478 Wandsworth LBC v Winder [1985] AC 461 87 Ward v Byham [1956] 1 WLR 496 450 Ward v James [1966] 1 QB 273 312, 313, 687 Ward v Tesco Stores Ltd [1976] 1 WLR 810 159–61, 547, 766 Warner Brothers Pictures Inc v Nelson [1937] 1 KB 209 276 Watt (or Thomas) v Thomas [1947] AC 484 7 Watt v Hertfordshire CC [1954] 1 WLR 835 103, 189 Watt vLongsdon [1930] 1 KB 130 691 Watts vMorrow [1991] 1 WLR 1421 299 Waverley BC vFletcher [1996] QB 334 42,401 Weaver v Ward (1616) Hob 134 218 Weld-Blundell v Stephens [1920] AC 956 343, 649, 651 Weller & Co v Foot and Mouth Disease Research Institute [1966] 1 QB 569 195 Wells (Merstham) Ltd v Buckland Sand & Silica Ltd [1965] 2 QB 170 430 Welsh v Chief Constable of the Merseyside Police [1993] 1 All ER 692 94 West v Bristol Tramways Co [1908] 2 KB 14 100, 101, 671 Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669; [1994] 1 WLR 938; (1993) 91 LGR 323, CA 11, 75, 78, 106, 238, 368, 797, 799, 824, 834,850 Wheeler v Leicester CC [1985] AC 1054 86 Wheeler vSaunders (JJ) Ltd [1996] Ch 19 154, 677 White & Carter (Councils) Ltd v McGregor [1962] AC 413, HL (Scotland) 231, 235, 439, 581, 584, 775
xlvi
Table of Cases White v Jones [1995] 1 All ER 691; [1993] 3 WLR 730; [1995] 2 AC 207
Whittaker and Whittaker v Campbell [1984] QB 318 186, 421, 503, 832 Wilchick v Marks and Silverstone [1934] 2 KB 56 Wilkinson v Downton [1897] 2 QB 57 William Sindall plc v Cambridgeshire CC [1994] 1 WLR 1016 Williams v Roffey & Nicholls (Contractors) Ltd [1991] 1 QB 1 Williams v Williams [1957] 1 WLR 148 Willis (RH) & Son v British Car Auctions [1978] 2 All ER 392 Wilsher v Essex Area Health Authority [1988] AC 1074 Wilson v Best Travel Ltd [1993] 1 All ER 353 Wilsons and Clyde Coal Co Ltd v English [1938] AC 57 Winson, The See China-Pacific SA v Food Corp of India Wiseman v Borneman [1971] AC 297 Withers v General Theatre Corporation Ltd [1933] 2 KB 536 Witter Ltd v TBP Industries [1996] 2 All ER 573 Wong Mee Wan v Kwan Kin Travel Services Ltd [1996] 1 WLR 38 Woodar Investment Development Ltd v Wimpey Construction UK Ltd [1980] 1 WLR 277 Wookey v Wookey (S) (A Minor), Re [1991] 3 WLR 135 Wooldridge v Sumner [1963] 2 QB 43 Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70 Workers Trust Bank Ltd v Dojap Ltd [1993] AC 573 Wright v British Railways Board [1983] 2 AC 773 Wringe v Cohen [1940] 1 KB 229 Wrotham Park Estate v Parkside Homes [1974] 1 WLR 798 xlvii
64, 107, 157, 191, 198, 202, 251, 383, 440, 465, 466, 674, 694, 702, 711, 712, 719, 724, 725, 735, 736
676 68, 151, 155, 640, 702 265, 484, 499 449, 452, 455, 832 450 200 158 539 732
94 325 466, 474 538, 541, 659 460, 462, 465 270 161 70, 104, 124, 367, 780, 828, 850 587, 835 311 218, 674–76 297, 363
Sourcebook on Obligations and Remedies X (Minors) v Bedfordshire CC [1995] 2 AC 633
X Ltd v Morgan-Grampian (Publishers) plc [1991] 1 AC 1, HL; [1990] 2 WLR 421, CA Yachuk v Oliver Blais Co Ltd [1949] AC 386 Yorkshire Dale Steamship Co Ltd v Minister of War Transport [1942] AC 691 Young & Marten Ltd v McManusChilds Ltd [1969] 1 AC 454 Young v Sun Alliance and London Insurance Ltd [1977] 1 WLR 104 Yuen Kun Yeu v Attorney General of Hong Kong [1988] AC 175 OTHER JURISDICTIONS
xlviii
25, 104, 107, 191, 194, 365–57, 685, 727, 732, 735, 737, 739, 747–9, 755, 756, 759 200, 285 637 321 345, 392 205, 208 734, 743
Table of Cases AUSTRALIA Caltex Oil (Australia) Pty Ltd v Dredge Willemstad (1976) 51 ALGR 270 Cameron v Campbell & Worthington (1930) SASR 402 Commissioner of State Revenue v Royal Insurance Australia Ltd (1994) 182 CLR 51 Field vNott (1939) 62 CLR 660 Smith vLeurs [1945] CLR 256 Stoakes vBrydges [1958] QWN 5 Sutherland Shire Council v Heyman (1985) 157 CLY 424 Voli v Inglewood Shire Council (1963) 110 CLR 74 Yerkey v Jones [1940] 63CLR 649 CANADA Mason v Risch Piano Co Ltd v Christner (1920) 48 OLR 8; 54 DLR 653 Motherwell v Motherwell (1976) 73 DLR (3d) 62 Rivtow Marine Ltd v Washington Iron Works and Walkem Machinery Equipment Ltd [1973] 6 WWR 692, SC (Canada) Stewart v Hawsen(1858)7CP 168 Swanson Estate v Canada (1991) 80 DLR (4th) 741 FRANCE Jand’heur Ch reun 13 fevr 1930; DP 1930 1.57 note Ripert: S1930 1.121 note Esmein GERMANY G v City of Hamburg, 21 October 1983, Decisions of the Federal Supreme Court in Civil Matters, Vol 88, p 344
344 579 828 96 650 152 643, 740, 747 722 260
579 142, 150, 154
344 579 747
674
146, 153
MALAYA Linggi Plantations Ltd v Jagatheesan [1972] 1 MLJ 89
836
USA Channel Home Centres, Division of Grace Retail Corporation v Grossman (1986) 795 F 2d 291
441
xlix
Sourcebook on Obligations and Remedies Federal Sugar Refining Co v United States Sugar Equalization Board (1920) 268 F 575 Jacob and Youngs v Kent (1921) 129 NE 889 Linkletter v Walker (1965) 381 US 618 Sherlock v Stillwater Clinic (1977) 260 NW 2d 169 South Pacific Co v Jensen (1917) 244 US 2095 Torkomian v Russell (1916) Atlantic Reporter 760 Utica City National Bank vGunn (1918) 222 NY 204 Wiggins v Moskins Credit Clothing Store (1956) 137F Supp 764 Williams v State of New York (1955) 127NE 2d 545
l
842 305 15 623 22 579 596 152 646
TABLE OF STATUTES Administration of Justice Act 1982— s 15 Animals Act 1971 s2 Animals (Scientific Procedures) Act 1986— s 5(3)(c)
Consumer Credit Act 1974 389, 500, 560 s 75 229 s 100 584 Consumer Protection Act 1987 201, 681 s1 681 ss 2-A 682 s2 49, 683 s 2(2) 683 s5 683 s 5(1) 194 ss 6,7 684 s 41 685 Contempt of Court Act 1981— s 10 288–92 County Courts Act 1984 114 s 38 278 Courts and Legal Services Act 1990— s 8(2) 688 Criminal Justice Act 1967— s8 17 Criminal Justice Act 1988 842 PtVI 841, 842
812 684 769
136
Carriage of Goods by Sea Act 1992 706 s 2(1) 706 Chancery Amendment Act (Lord Cairn’s Act) 1858 255, 361–64 s2 361, 363 Child Support Act 1991 367 s 33 367 Children Act 1989 734, 748 s1 38 s 17 733 Civil Jurisdiction and Judgments Act 1982— s 34 369, 372, 373 Sched 1 372 Civil Liabilities (Contribution) Act 1978 617–21, 792 s1 617, 793 s 1(1) 240, 618–21 s 1(6) 793 s2 792 s 2(3) 619 s3 239 s 6(1) 240, 618–21 Common Law Procedure Act 1852 240, 612, 779, 780 Common Law Procedure Act 1854 329, 361 Companies Act 1985 354 s 395 377 Congenital Disabilities (Civil Liability) Act 1976 31, 33
Damages (Scotland) Act 1976 681 Defamation Act 1952— ss 5, 6 691 Defamation Act 1996 691 s 15 691 Defective Premises Act 1972 676, 684 s4 676, 677 Education Act 1944 Education Act 1981 Employers Liability (Defective Equipment) Act 1969 Employment Rights Act 1996— s 123(1) li
727 727 684 327
Sourcebook on Obligations and Remedies English Workmen’s Compensation Act 1897—
Landlord and Tenant Act 1927 231 Law of Property Act 1925— s 40 253, 426 s 56 79 s 56(1) 78 s 84 363 s 205(1)(xx) 78, 79 Law of Property (Miscellaneous Provisions) Act 1989 426, 448 s1 449 s2 253, 425, 443, 448 Law Reform (Contributory Negligence) Act 1945 360, 397– 99, 632, 637, 770, 771 s1 771 s 1(1) 773 s4 397, 398, 773 Law Reform (Frustrated Contracts) Act 1943 574, 601, 602, 838 s1 601, 602 s2 601 Law Reform (Married Women and Tortfeasors) Act 1935 619 s6 620, 621 Law Reform (Miscellaneous Provisions) Act 1934 32, 33, 641, 770, 812, 818 s1 711 s 1(1) 632 s3 812 s 3(1) 818 Limitation Act 1939— s 27 19 Limitation Act 1980— s5 823, 824 s 11 622, 625 s 11(1) 621, 623 s 32(1)(c) 823, 824, 829
103
Factories Act 1937 334, 771 Factors Act 1889 400 Family Law Act 1996 149 Fatal Accidents Act 1846 765 Fatal Accidents Act 1976 225, 616, 632, 641, 645, 681, 770 s 1(1) 632 s 1A 299 s5 632 Food Safety Act 1990 182 Gaming Act 1845 s 18
785 784, 786
Harbour, Docks, and Piers Clauses Act 1847— s 74 239 Highways Act 656, 657 Hire-Purchase Act 1964— ss 27, 29 400, 401 Housing Act 1985 47, 125, 655– 57 s 119 47 Housing Act 1996— s 16(1)(a), (b) 47 Human Organ Transplants Act 1989— s1 38, 40 Human Rights Act 1998 87, 98, 117, 691, 692, 751 Insolvent Debtor’s Relief Act 1729 Judicature Act 1873 s 25(8) Judicature Act 1875
228
116, 229, 369, 370 273 229, 369, 370, 476 lii
Table of Statutes s 38(1) s 76 Local Government Act 1972 s 222 s 222(1)
626, 676, 677, 684, 720 626, 676 626 627
621, 623 734
s2 s 2(2) s 2(3) Occupiers’ Liability Act 1984 366, 684, 720 Occupiers’ Liability Act (Northern Ireland) 1957 555 Offences Against the Person Act 1861— s 38 224
461 297, 790 134
Matrimonial Homes Act 1983 38, 149 Mental Health Act 1959 282 Merchant Shipping Act 1894— s 503 354, 718–20 Merchant Shipping Act 1995— s 93 107 s 185 718 Sched 7 718 Merchant Shipping (Safety and Load Line Conventions) Act 1932 603 Minors’ Contracts Act 1987 834 s3 835 Misrepresentation Act 1967 60, 298, 317, 320, 466, 473–75, 480, 488 s1 474, 480 s2 60, 474 s 2(1) 320, 321, 474, 475, 484, 488 s 2(2) 474, 475, 479, 481, 488 s 2(3) 475 s3 558 Misrepresentation Act (Northern Ireland) 1967— s3 558 Moneylenders Acts 1900–27 500 Occupiers’ Liability Act 1957 345, 366, 402, 555,
Police and Criminal Evidence Act 1984— s 24 224 Powers of the Criminal Courts Act 1973— s 35 87 Protection from Harrassment Act 1997 142, 148, 151, 155, 156 ss 1–5, 7 143 Real Property Act 1845 s5 Redundancy Payments Act 1965 Reservoirs Act 1975— s7 Restrictive Trade Practices Act 1956 Road Traffic Act 1930
78 78, 79 190 617 697 535
Sale and Supply of Goods Act 1994— s2 479 Sale of Goods Act 1893 48, 49, 234, 387, 388, 392, 393, 469, 496, 552, 574, 575 liii
Sourcebook on Obligations and Remedies s 11(1)(c) 236, 478 s 14 342, 531, 532 s 14(1) 48, 342, 347 s 14(2) 347 s 16 246 s 25(2) 400 s 35 478 s 50 579 s 53(2) 342, 349 Sale of Goods Act 1979 49, 389, 402, 447, 559 s5 526 s6 492, 526 s8 444, 447 s9 447 ss 12,13 557 s 13(1) 468 s 14 49, 393, 514, 515, 523, 557 s 14(2) 515 s 14(3) 48, 515 s 14(6) 515 s 15 557 ss 16–20 40 ss 16–18 49 ss 20A-20B 50 s 35 479 s 53(2) 350 Statute of Frauds 1677 426 Suicide Act 1961 633 Supply of Goods and Services Act 1982 65, 391–93, 447, 531, 547 s2 557 s9 1, 391, 393 s 13 1, 49, 357, 382, 383, 391, 393, 523, 711 ss 14,15 447 Supply of Goods (Implied Terms) Act 1973— ss 8–11 557
Supreme Court Act 1981— s 31 87 s 31(3) 136 s 35A 799, 812, 818 s 37 1, 51, 273, 279 s 37(1) 271, 278 s 37(3) s 49 585 s 50 363 s 69 692 Supreme Court of Judicature Act 1873 585 Supreme Court of Judicature Act 1875 Theft Act 1968 Torts (Interference with Goods) Act 1977 s 2(1) s 2(2) s3 s 3(1)-(4) Trade Disputes Act 1906 s3 Trade Union and Labour Relations Consolidation) Act 1992— ss 10,12 Trading Stamps Act 1964 Trading Stamps Act (Northern Ireland) 1965
124 24, 56, 328, 329, 382, 402 328, 782 328 329 328 44 697
35 558 558
Unfair Contract Terms Act 1977 24, 402, 408, 432, 466, 552, 553, 555, 561, 569, 572, 584 s1 408, 555 s 1(1) 560 ss 2–7 555 ss 2–4 555, 560 liv
Table of Statutes s2 s 2(1) s 2(2) s3 s 3(2) s4 ss 5-7 s5 s6
s 6(3) s 6(4) s7 s 7(3), (4) ss 9-11 ss 12-14 ss 13, 20, 21 Sched 1 Sched 2
408, 555, 559, 638 194, 560, 561 560, 561 555, 560 556 556, 560 559 556 557, 558
lv
561 555 555, 557-60 561 558 559 561 560 558, 561
TABLE OF STATUTORY INSTRUMENTS Asbestos Products (Safety) (Amendment) Regulations 1987(SI 1987No 1979) Control of Asbestos at Work Regulations 1987 (SI 1987 No 2115) Control of Misleading Advertisements Regulations 1988 (SI 1988 No 915)— reg 6(1), (3) County Court Remedies Regulations 1991 (SI 1991 No 1222) County Court Rules 1981 (SI 1981 No 1681)— Ord 13, r 5 Motor Cars (Use and Construction) Order 1904 Package Travel, Package Holidays and Package Tours Regulations 1992 (SI 1992 No 3288) s 15 Rules of the Supreme Court Ord 14A Ord 15, r 16 Ord 18, r 19 Ord 18, r 19(1)(a) Ord 18, r 19(2) Ord 25, r 5 Ord 53, r 9(5) Ord 59, r 3(1) Ord 59, r 11(4) Unfair Terms in Consumer Contracts Regulations 1999 (SI 1999 No 2083) regs 2–5 reg 5 reg 5(5) regs 6–10 reg 8 reg 10(2), (3) regs 11–13 reg 12 reg 13(2)-(6) reg 14 reg 15 Sched 1 Sched 2 Sched 2, para 1 Sched 2, para 2 lvii
396 396
136 278 723 758 540 540 617 281 137 94, 139 137 281 368 7 688 51, 408, 409, 561, 572, 584 562 409, 562 567 563 408 564 564 563–66 565 565 566 562, 566 563, 567 567–69 568
TABLE OF OTHER LEGISLATION FRANCE Code civil
Code PenalArts 121–1, 121–3 175 Loi 5 juillet 1985 674, Nouveau Code de Procedure Civile— Art 16 176 Art 31 136, 222
38, 41, 46, 64, 175, 199, 381, 391, 611, 674, 774, 849, 853 Art 5 184 Art 9 38 Art 16 38, 692 Art 16–1 38 Arts 16–3, 117 135 Art 184 136 Arts 220–1, 232, 264–1 135 Art 371 38 Art 388–2 135 Art 544 46 Arts 581, 644 47 Art 1101 387 Art 1102 384, 448 Art 1103 384, 449 Arts 1105, 1106 449 Art 1107 387 Art 1108 834 Art 1109 406, 422, 483 Arts 1110, 1117 483 Art 1134 63, 64, 406 Art 1135 406 Art 1147 64, 390, 516 Art 1148 390, 516 Art 1150 340 Art 1156 416, 536 Art 1370 777 Arts 1372, 1376 57, 777 Art 1382 38, 68, 199, 639, 640, 645, 774, 850 Art 1383 640 Art 1384 68, 125, 133, 199, 645, 660, 662, 674, 677, 760, 769 Art 1387 33 Art 1400 38 Art 2279 503
GERMANY Bürgerliches Gesetzbuch (Civil Code) § 276 § 812
199, 827, 828 391 777, 827
SPAIN Código Civil Arts 30, 32 SWITZERLAND Code Civil— Art 62 Code of Obligations— Art 62
41, 199 33
133
77
EUROPE AN UNION DIRECTIVES Directive 85/374/EEC (Product Liability Directive) Directive 90/314/EC
681 540
CONVENTIONS Baltic and International Maritime Conference (Copenhagen) 19 Brussels Convention (Convention on the Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters) 71–74 lix
Sourcebook on Obligations and Remedies Art 2:201 Art 2:202 Art 2:205 Art 2:206 Arts 2:208, 2:209 Art 2:211 Art 2:301 Art 4:103 Art 4:106 Art 4:107 Art 4:108 Art 4:109 Art 4:110 Art 4:111 Arts 4:112–4:116 Art 4:117 Art 5:101 Arts 5:102–5:106 Arts 5:103, 5:104 Art 6:101 Art 6:102 Art 6:108 Art 6:110 Art 6:111 Art 8:101
Art 5 71, 74 Art 5(1) 71–74, 76 Art 5(3) 71, 74, 76 Convention for the Protection of Human Rights and Fundamental Freedoms 1953 130, 690 Art 6 749–51 Art 6(1) 749, 750 Art 10 690 Art 10(2) 130 Convention (Draft) on Civil Liability for Damage Resulting from Activities Dangerous to the Environment (Strasbourg 26 January 1993)— Art 5.1 672 Declaration of the Rights of Man— Art 13 103 European Economic Area Agreement (EEA Agreement) 1992 562 Hague Rules 714, 715, 718, 719 Hague-Visby Rules 714, 715 EUROPEAN CONTRACT LAW Principles of European Contract Law 379, 382, 391, 402, 416, 418, 421, 425, 427, 432, 442, 507, 517, 522, 551, 561, 572, 577, 578, 590, 600, 609 Art 1:101 380 Art 1:102 407, 551 Arts 1:201, 1:202 409 Art 2:101 379, 402 Art 2:102 402, 421, 424 Art 2:103 402, 447
Arts 8:103, 8:106 Art 8:108
Art 8:109 Arts 9:301, 9:303 Art 9:307 Art 9:309 Art 9:501 Arts 9:502–9:505 Art 9:503 Art 9:509
lx
424 430 430, 433 433 431 402 434 476, 486, 488, 490 476, 482 503, 504 504 508 407, 482, 551 508 482 476, 482 379, 416, 536 417 551 466, 469 379, 512 307 465, 466 592, 599 379, 382, 390, 516, 600 572 294, 382, 390, 516, 523, 573, 588, 601 551 572 601 601, 602 294 295 340 581, 588
TABLE OF ABBREVIATIONS AC AJCL All ER APD App Cas
Appeal Cases (Third Series) American Journal of Comparative Law All England Law Reports (Butterworths & Co) Archives de Philosophic du Droit Appeal Cases (Second Series)
BGB BGH
Bürgerliches Gesetzbuch Bundesgerichtshof
C CA Cass civ CC Ch Ch D CJQ CLJ CLP CLR COM CUP
Code of Justinian Court of Appeal Cour de cassation (chambre civile) Code civil (France) Chancery Division (Third Series) Chancery Division (Second Series) Civil Justice Quarterly Cambridge Law Journal Current Legal Problems Commonwealth Law Reports Commission Documents (EU) Cambridge University Press
D Dig DS
Dalloz (also Digest of Justinian) Digest of Justinian Dalloz-Sirey
EC ECR EG EGLR EHRR EP ER EU
European Community European Case Reports Estates Gazette Estates Gazette Law Reports European Human Rights Reports European Parliament English Reports European Union
FLR Fs
Family Law Reports Festschrift
G
Institutes of Gaius
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House of Lords
ICLQ IECL IJSL
International and Comparative Law Quarterly International Encyclopedia of Comparative Law International Journal for the Semiotics of Law
J JCP JLH
Institutes of Justinian Jurisclasseur Périodique Journal of Legal History
KB
King’s Bench (Third Series)
LC LGR LJCP LJ Ex LJQB LI Rep LQR LR...CP LR...Eq LR…Ex LR…HL LR...QB LS LT
Lord Chancelleor Knight’s Local Government Reports Law Journal Common Pleas Law Journal Exchequer Law Journal Queen’s Bench Lloyd’s List Law Reports Law Quarterly Review Common Pleas Cases (First Series) Equity Cases (First Series) Exchequer Cases (First Series) English and Irish Appeals (First Series) Queen’s Bench Cases (First Series) Legal Studies Law Times Reports
MJ MLJ MLR
Maastricht Journal of European and Comparative Law Malayan Law Journal Modern Law Review
NCPC NILQ NJW NBW
(French) Nouveau Code de Procedure Civile Northern Ireland Legal Quarterly Neue Juristische Wochenschrift (Germany) Nieuw Burgerlijk Wetboek (Netherlands Civil Code)
OJ OJLS OUP
Official Journal (EC) Oxford Journal of Legal Studies Oxford University Press
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Table of Abbreviations P PC PECL PL PUF
Probate Division (Third Series) Privy Council Principles of European Contract Law Public Law Presses Universitaires de France
QB QBD QWN
Queen’s Bench (Third Series) Queen’s Bench (Second Series) Queensland Law Reporter and Weekly Notes
RabelsZ RIDC RLR RSC RTD civ
Zeitschrift für Ausländisches und Internationales Privatrecht Revue Internationale de Droit Comparé Restitution Law Review Rules of Supreme Court Revue Trimestrielle de Droit Civil
SLR Swiss CO
Statute Law Review Swiss Code of Obligations
UWAL Rev
University of Western Australia Law Review
WLR
Weekly Law Reports
ZEuP
Zeitschrift fur Europäisches Privatrecht
lxiii
INTRODUCTION
GENERAL REMARKS In their joint statement issued in July 1993, the Law Society and the Council of Legal Education recognised the validity of the comparative, jurisprudential, historical and interdisciplinary approaches to the teaching of the foundational subjects. And, in renaming Contract and Tort as Obligations I and Obligations II, they seemingly went some way to injecting a comparative dimension into the common law. In addition, the statement emphasised the need for an understanding of the fundamental doctrines and principles which underpin the law, together with a knowledge and appreciation of the sources, institutions, concepts and reasoning and research methods employed by lawyers. Mere knowledge of the rules is recognised as not being enough; the good jurist must be able to apply the law to the facts and to communicate the reasons for the answers arrived at, and the sources used, when it comes to problem solving in law. In other words, legal method, legal reasoning, jurisprudence and comparative law are now formally an integral part of subjects like the law of obligations. All this may seem self-evident. However, it is by no means so easy to assert as a matter of form what it is to have knowledge of, say, the law of obligations, since the old idea that law is a matter of learning and mechanically applying rules is no longer a viable knowledge thesis. The processes of legal reasoning and legal problem solving are now known—thanks, in part, to artificial intelligence research1—to be much more complex and sophisticated processes. This is not to say that rules and principles are not important; knowledge of statutory rules and case law principles is undoubtedly a central aspect of learning the law. What must be emphasised is the gap between the rule and the decision: the process of moving from a legal proposition (that is, a rule or principle) to an actual decision in a legal problem involves reasoning processes that need to be examined in themselves. These processes are, in other words, part of legal knowledge itself. Traditionally, these reasoning processes have been associated with the assumption that law is a matter of prepositional knowledge - that is to say, that it is a subject consisting of rules and principles. Thus, reasoning has, particularly on the continent, been seen largely as a matter of mechanical application. Legal theorists have, of course, recognised a distinction between easy and hard cases. The easy case will be one where a rule can be mechanically
1
See, generally, Samuel, The Foundations of Legal Reasoning, 1994, Maklu; Thomasset and Bourcier (eds), Interpreter le droit: le sens, l’interprète, la machine, 1997, Bruylant.
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applied via the syllogism (see Chapter 2), whereas the hard case will be one where the reasoner will have to undertake difficult interpretation exercises before an acceptable decision can be reached.2 But these theorists have never questioned the assumption that law consists of rules and principles, with the result that legal textbooks have, on the whole, been seen as being little more than descriptive works. Their role is to set out, as clearly as possible, the rules and principles of the area to which they are devoted. Sourcebooks and casebooks are, admittedly, different; their role has been to emphasise aspects of legal knowledge not to be found in the traditional textbook. And so a good casebook will invite its readers to “brief each case read; that is to say, it will ask the reader to think not only about the rule or principle in issue, but also about the interests, values, ideologies, methods and the like that each case raises. Casebooks and sourcebooks thus make good vehicles for learning to see beyond the rules.
SCOPE OF THE PRESENT WORK This present work will, however, go beyond the standard sourcebooks in as much as it will explicitly devote chapters to the structure of the common law (Chapter 1) and to legal reasoning and method (Chapter 2). The aim of these chapters will be to provide a methodological context within which the details of the law of obligations can be understood. They will seek to give readers of the contract, tort and remedies source material some further material which will explicitly help them with research and problem solving. The point to be emphasised here is that no area of positive law can be properly understood without, first, some understanding of the mentality of the common law. In addition to these structure and method chapters, there will be a chapter devoted to the law of remedies (Chapter 3). There is a range of reasons for including such a chapter, but two are particularly important. First, the history of the law of obligations in both the common law and civil law is closely interrelated with the law of actions (remedies). In the Digest of Roman law, the title dealing specifically with the category of obligations is entitled de obligationibus et actionibus3 and in the common law, before the categories of contract and tort were adopted, problems were analysed via forms of action such as trespass and debt. Secondly, in English law at any rate, practising lawyers have still not escaped from remedies thinking. Liability in contract and in tort—and even more in restitution—is often measured in relation to the existence of a cause of action. And this cause of action, in turn, has been
2 3
See Bengoetxea, The Legal Reasoning of the European Court of Justice, 1993, OUP, pp 184ff, 146ff. Dig 44.7. A good introduction to Roman law is Borkowski, Textbook on Roman Law, 2nd edn, 1997, Blackstone.
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Introduction
described by Diplock LJ as ‘simply a factual situation the existence of which entitles one person to obtain from the court a remedy against another person’.4 The linking of remedies to obligations has, then, not only a historical and comparative dimension, but an important practical aspect. One of the first questions that needs to be asked when ‘briefing’ a case is: what is the plaintiff seeking to obtain from the court? As we shall see, the law applicable to a factual situation may vary, depending upon whether a plaintiff is seeking, say, damages or an injunction. The chapters following the one on remedies will divide obligations into two broad kinds: those that are contractual (Chapters 4–6) and those arising outside of contract (Chapters 7–8). There is nothing inevitable about such a dichotomy and, as far as English law is concerned, it is arguable that isolating contractual obligations from the non-contractual might even be misleading since, historically and conceptually, compensation actions have the same remedial basis in the action of trespass. Moreover, when it comes to restitution, the linking of debt to contract has caused a number of conceptual problems. Nevertheless, in both the civil and the later common law, contract has such a specific and particular history that the subject has become more than a subcategory of the law of obligations.5 It is a fundamental legal relationship which cannot easily be abandoned, in that it continues to act not just as a means of directly or indirectly transferring rights of property,6 but as a paradigm obligation through which all other obligations often have to defer. Non-contractual obligations may be unavailable in situations where a contractual obligation governs. The distinction between contractual and noncontractual obligations continues, then, to command practical and philosophical respect and, just as important perhaps, remains a useful bridge between the English legal system and those of our continental partners.7
EUROPEAN DIMENSION This comparative aspect to legal knowledge has been specifically recognised by the Lord Chancellor’s Advisory Committee on Legal Education and Conduct in its First Report on Legal Education and Training.8 Now, from a comparative position, the law of contract, as we have just seen, dominates the law of obligations in that it takes up most of the articles in the obligations section of the civil codes. Non-contractual obligations seem, by comparison, an afterthought (although the case law tells a different story). Thus, a work
4 5 6 7 8
Letang v Cooper [1965] 1 QB 232, pp 242–43. See, generally, Gordley, The Philosophical Origins of Modern Contract Doctrine, 1991, OUP. See, eg, Sale of Goods Act 1979, ss 16–18. See, now, PECL. ACLEC, First Report on Legal Education and Training, 1996, para 1.3.
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wishing to state the English law of obligations, always assuming that such a category is viable this side of the Channel, is almost forced to devote pride of place to contract. Yet, contract holds a central position in the law of obligations for another reason as well. Not only does a good knowledge of contract act as an introduction to Western private law as a whole, but the subject lies at the centre of the legal system, in as much as it relates, often directly, to all the other areas of private and public law. Contract is central to commercial law, property law, employment law and even administrative law and criminal law. Indeed, it is important to the understanding of a number of jurisprudential and political theories. This present sourcebook in no way wishes to underestimate or diminish the importance of non-contractual obligations. However, the aim of the work is to provide a structural approach to the English law of obligations which reflects the category in a European, rather than a strictly English, context. This central position of contract in Western law is important for another reason as well. The law of contract is one of the first foundational subjects where international and European unification has been seriously attempted. There are now two codes that attempt to harmonise contract law. The first is the UNIDROIT Principles for International Commercial Contracts. This code provides a set of uniform contract rules applicable anywhere in the world, whatever the legal tradition. It is a code supposedly dictated by the needs of commerce and thus represents a new reincarnation of the old idea of a universal lex mercatoria. The second, and perhaps the more important for the European lawyer, is the code unofficially known as the Lando Code. This code’s official title is Principles of European Contract Law and it is an attempt to represent a harmonised law of contract for the EU. The first point to be made about both of these codes is that they do not reflect English law as a whole, only certain aspects of it. If the English lawyer wishes to understand the structure and symmetry of the Lando code, then some knowledge of civilian legal thinking is essential. A second point is that these codes may represent the future. As Professor Kötz has pointed out: ‘If Europe is to be economically unified in a Single Market, there is no doubt that its private law will also have to be unified, at least to some extent/ Professor Kötz is one of a number of European jurists who are in favour of ‘books which disregard national boundaries and, freed from any particular national system or systematics, are addressed to readers of different nationalities’.9 The scope of this present sourcebook is not designed to meet the Kötz vision. For a start, books which attempt to transcend particular legal systems can so easily end up as works of legal tourism.10 A few cases from a whole range of national systems provide little insight into the way the law of obligations
9 10
Kötz, European Contract Law, 1997, OUP (trans Weir), p v. Cf Legrand [1999] CLJ 439.
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Introduction
functions as part of an institutional whole (courts, reasoning, remedies, etc). Furthermore, it has to be said that not all jurists are in favour of EU harmonised codes. Professor Kötz’s own translator has described such codes as ‘demented’;11 and while this might be seen as something of an exaggeration, Tony Weir has subsequently made the valuable point that Kötz’s statement is actually not supported by the evidence. England and Scotland have long enjoyed both a Single Market and monetary union without ever having felt the need to harmonise their private laws.12 Other writers have equally raised serious objections about the level of debate on harmonisation.13 All the same, none of these arguments should be allowed to eclipse the important European dimension to legal knowledge, in particular with regard to the whole notion of a law of obligations. Indeed, a further point to make about the two contract codes is that they have a relevance in respect of contract theory. They act as a link between the common law of contract and the civilian systems of contract. This link is of importance when it comes to contract theory because, as we have seen, ‘even in the late 18th century, English judges did not think in terms of a law of contract’; the judges ‘thought in terms of forms of action such as assumpsit and covenant’. However, by ‘the end of the 19th century…the common law had acquired a new doctrinal structure largely by borrowing from the continent’.14 Roman, German and French law are thus of importance when it comes to thinking about the theoretical basis of contract. Accordingly, this present work adopts a civilian orientation, even if such an orientation is relatively marginal. The aim is to begin to present English law in a European context.
LAW OF OBLIGATIONS When one turns to the idea of a law of obligations, this civilian foundation is of fundamental importance, since the category itself is a civilian invention. In fact, it is by no means easy to impose on the common law a law of obligations framework, and thus knowledge of the civilian dimension is of relevance. It may seem simple enough to put the old subjects of contract and tort together under a generic heading, but it has always to be remembered that, in the civil law tradition, the idea of a law of obligations has had, since Roman times, a specific meaning and purpose. An obligation was not a means of making something ours or a vehicle for vindicating some right of possession or
11 12 13 14
Weir, A Casebook on Tort, 8th edn, 1996, Sweet & Maxwell, p 3. Weir, ‘Divergent legal systems in a single Member State’ [1998] ZEuP 564. See, in particular, Legrand, ‘European legal systems are not converging’ (1996) 45 ICLQ 52. Gordley, ‘Contract in pre-commercial societies and in Western history’, IECL, Vol VII, Chapter 2, para 22. See also Simpson, ‘Innovation in nineteenth century contract law’ (1975) 91 LQR 247.
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property; it was a means by which someone was obliged to do, to give or not to do something.15 So, as Gaius points out in his Institutes, we cannot use an obligations remedy to get back our own property, since what is already ours cannot be conveyed to us (nec enim quod nostrum est nobis dari potest).16 In Roman law, an obligation was defined in relation to an actio in personam—that is to say, in terms of a personal remedy aimed at a specific and named person. This personal claim had to be distinguished from claims in respect of things; an actio in rem was a legal remedy that was aimed at a specific piece of property (res) and was used to assert either ownership (dominium) or a real right (ius in re) in a thing. This remedial dichotomy between personal and real actions in turn gave rise to a fundamental distinction in civil law thinking between the law of obligations and the law of property.17 This distinction between property and obligations continues to lie at the heart of the continental civil codes, and it acts as the basis for classifying legal rights. Indeed, so strong is the dichotomy in German law that it is impossible to progress as a private lawyer without a thorough understanding of the difference between the relationship between person and person (obligations) and the relationship between person and thing (property). The distinction between the two relationships acts as the starting point for the whole of private law. It is this strict separation between real and personal rights, between property and obligations, which causes the trouble for the common lawyer. Certainly, the English jurist will have little difficulty in distinguishing, as a matter of form, between, for instance, contract and possession or tort and ownership, but in problem solving substance it is very easy indeed for these fundamental notions to become confused.18 O lends goods to D and these goods are stolen by D’s employee; is this a contract, tort or property problem? T steals money from P, his employer, and gambles it away at D’s casino; if P sues D for the return of the stolen money, is this an action in personam or in rem? The German lawyer will want clear answers to these questions, since they raise issues of basic legal science. The common lawyer, however, will be little troubled by such questions, save perhaps if the defendant is bankrupt. The common lawyer will simply think in terms of whether P has a remedy against D. From the historical position, the English forms of action, unlike those of Roman law, were little interested in conforming to the property and obligations dichotomy. To the early common lawyer, all actions were a mixture of both property and obligations.19 This has resulted in a situation where the modern law of contract and tort has to do the work of the law of property as well as the law of obligations (see Morris v Martin, p 80). The torts of trespass, nuisance and
15 16 17 18
Dig 44.7.3 pr. G4.4. Jolowicz, Roman Foundations of Modern Law, 1957, OUP, pp 61–81. See Samuel, ‘Property notions in the law of obligations’ [1994] CLJ 524.
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conversion often involve litigation problems arising out of the relationship between person and thing (see Waverley EC v Fletcher, p 42). Moreover, any problem involving damage to, or loss of, movable property owned by one person but in the possession of another can often appear particularly complex, since these facts will give rise to rights and duties arising out of contract, tort and possession (bailment).20 This confusion between property and obligations works against the development in English law of a category of the law of obligations in the full continental meaning of the term. Nevertheless, the notion presents common lawyers and civil lawyers with a challenge. If harmonisation of private law is to become a reality, the English jurist will have to make some compromises at the level of legal science. The civil lawyer, equally, might have much to learn from the English emphasis on remedies which can inject into problem solving an element of flexibility. By starting out from an injunction rather than a rigid definition of ownership, the common lawyer finds it much easier to cope with changing notions of property even if it is at the price of introducing uncertainty, if not anarchy, into legal thinking. In turn, a rational and structured legal science can, on occasions, aid problem solving by allowing the lawyer to operate with ease at one and the same time at the level of law and fact. The relationships between person and person and between person and thing permit an ordered analysis of factual problems while, at the same time, facilitating with ease the application of the law (see below, pp 381–84).
LEGAL INSTITUTIONS AND LEGAL ANALYSIS The idea that law can act at one and the same time inside and outside of the facts is the key to its success as a ‘scientific’ discourse. Law can, seemingly, ‘explain’ social facts and ‘predict’ what, in particular circumstances, ought to happen. If a coach company loses the suitcase of one of its passengers, legal discourse can explain these facts in terms of legal relationships (contract, bailment) which act as the medium for turning the factual situation into one of rights and duties. These rights and duties then become the basis for predicting what ought to happen in terms of responsibility for its loss. Thus, the taking into possession of the passenger’s suitcase (relationship between person and thing) gives rise to a bailment relationship which endows the passenger with certain rights and the coach company with certain duties. The passenger has the right to have her suitcase returned unless the coach company can show that it has fulfilled all its duties with respect to the thing; that is to say, it can show that the case was lost through no fault on its part.21 The key
19 20
Milsom, Historical Foundations of the Common Law, 2nd edn, 1981, Butterworths, p 263. See, eg, The Albazero [1977] AC 774.
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relationships here are those between passenger and suitcase, between passenger and coach company and between coach company and suitcase; and these relationships translate into rights of ownership, possession, contract and tort. Sometimes, the mere relationship between person and thing can, of itself, give rise to rights and duties; thus, possessory rights often follow the thing itself. If, however, instead of losing her suitcase, the coach company, through the act of one of its employees, managed to injure the passenger through bad driving, then, as far as English law is concerned at any rate, merely to show that the company was ‘in possession’ of the passenger is not enough (see Readhead v Midland Ry, p 543).22 Although the relationship is undoubtedly close enough of itself to give rise to a duty on the part of the coach company to take care of its passengers, the passenger still has to show, in addition to the relationship (duty of care), damage and fault. These latter notions are typical legal focal points, for they are notions that have meaning at one and the same time in the world of fact (broken bones, torn clothes, carelessness, etc) and the world of law (tort of negligence, definitions of damage). They are, in other words, notions that operate within and without the facts. However, even within the world of law, damage and fault cannot exist in isolation. They can only attach to things and to people. Accordingly, two other legal notions that exist inside and outside of facts are the notions of a person and a thing. This may seem too obvious to warrant attention. Yet,, it is more sophisticated than it first appears, since many ‘persons’ who cause or suffer damage are not real persons at all. They are organisations endowed with legal personality by the law. They are collectivities manifesting not only the characteristics of subjectivity which one normally associates with the human individual, but also their own characteristics, some of which may, in turn, be imposed upon the individual human (see Tesco v Nattrass, p 33). Equally, there are many ‘things’ that are not real things in the sense that they can be touched. And so, for example, if D owes C £50,000, C has an asset that is a very real asset in terms of wealth, but intangible in terms of physical existence in the real world. The result of these legal creations is that there can be, in effect, fictional people (companies) owning fictional things (debts), and it is only when lawyers are faced with certain types of criminal proceedings that the unreality of the situation has a habit of intruding. If an angry coach driver assaults one of the passengers, is it true to say that the passenger, who, of course, has a contract with the coach company, has been assaulted by the coach company (cf Keppel Bus Co, p 537)?
21 22
Houghland v RR Low (Luxury Coaches) Ltd [1962] 1 QB 694. Note, however, that French law takes a different view; the railway company undertakes by contract to achieve a result (obligation de résultat), that is to say, to deliver the passenger to his or her destination.
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LAW OF ACTIONS All this brings one back to remedies. For, whatever the rights, duties, relations or persons in issue, the key question for the parties to any legal dispute is the nature of the legal action. Can P sue D for compensation? Can P obtain against D an order stopping him from playing his trumpet after midnight? Can P obtain restitution of property mistakenly given to the wrong person? The granting or refusing of such actions may well, on many occasions, depend upon the rights and obligations of the parties, but these rights and obligations owe their existence to a legal structure that recognises the institutions of ‘persons’ and ‘actions’. If P is granted an injunction against D prohibiting the latter from interfering with goods in P’s possession, then the court is effectively constructing an institutional structure between ‘person’, ‘thing’ and ‘action’ that can act as the basis for a property ‘right’. It is the action that acts as the dynamic means of constructing a relationship between person and thing (see, for example, Lipkin Gorman, p 782 and Kingdom of Spain v Christie, p 209). In the civil law systems on the continent, this institutional role of the legal action has been suppressed by codes of rights which express the institutional structures only through written propositions (regulae iuris—rules and principles). For example, in the civil law, in a dispute over the title to goods, one would start not with an injunction, but with a definition of ownership, and one would then work from there towards a court order. But in the common law, one would not start out from a definition of ownership; one would start from an action for damages for wrongful interference with goods, or, alternatively, from an injunction, and this would lead the court towards a discussion about property rights.23 Of course, if the court grants the damages or injunction, it is implying the existence of an institutional relationship between plaintiff and goods. The action remains a live institution in the common law and has not, as yet, been replaced by the notion of a right (in the continental sense of the term). However, before one can think in terms of the institutions of persons, things and actions, it is first necessary to look at the physical institutions of private law itself. In other words, it is necessary to look at the courts, judges, legislators and parties who, or which, give the law of actions its dynamic aspect.
23
For an extreme example, see Ex p Island Records [1978] Ch 122.
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OBLIGATIONS AND METHOD It may seem, at first sight, somewhat undisciplined, if not self-indulgent, to stray from the substantive details of contract, tort and restitution into areas normally reserved for introduction to law or English legal system courses. Indeed, even the idea of reducing the massive case law and legislative texts on contract and tort, not to mention unjust enrichment and remedies, to a single collection is likely to seem in itself reckless. However, several points can be offered in response to such criticisms. The first point has already been touched on at the beginning of this introductory essay: what is it to have knowledge of the law of obligations? Is such knowledge dependent simply on what Professor Collins has called an ‘operationally closed system’?24 Or is it rather different in nature? An alternative approach to the positivistic closed system view of contract, tort and restitution is one that sees these subjects as part of a much broader legal culture. This culture itself is two-dimensional. The first dimension is the common law tradition itself, which in many ways is a ‘seamless web’. This expression, first used by Maitland, is used here to mean that drawing frontiers not just between contract, tort and restitution, but equally between obligations, legal method, legal system, property and so on is fundamentally misleading.25 The methodology of the common law and the roles of the various courts are, for example, just as much a part of the English law of contract as offer and acceptance (see, for example, Blackpool and Fylde, p 436). Cases, whatever category they may be squeezed into by textbook writer or law reporter, are about reaching solutions on a set of facts; how these facts are ‘constructed’ and how the judges envisage their roles are pieces of knowledge just as vital as any precedent or statutory rule.26 The second dimension is Europe. This dimension is of particular importance, as we have seen, since the category of ‘law of obligations’ is civilian in origin. Even in Europe, however, the methods of judge and jurist, together with the procedural structures within which the courts function, are of fundamental importance when it comes to understanding the way factual situations are handled. Had the facts of Rigby found themselves in a French court, for example, the procedural structure of the French judicial system would have had a direct bearing on both the category applicable and the solution adopted (see below, p 103). The second point to be made is that knowledge of contract or tort is not necessarily a matter of knowing in detail a vast number of cases and statutes. Of course, a huge databank of information is never to be dismissed, since the
24 25 26
See Collins, ‘Legal classifications as the product of knowledge systems’, in Birks (ed), The Classification of Obligations, 1997, OUP, pp 57–70. Cf Lord Goff in Kleinwort Benson Ltd v Lincoln CC [1998] 3 WLR 1095, p 1118. See, further, op cit, fn 1, Samuel.
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ability to cite and to apply to a particular set of facts a large range of precedents and texts is one important aspect of legal knowledge and method. The professional practitioner working in the area of personal injury litigation will need a highly detailed knowledge of procedure, of case law and statutory texts and of the latest figures concerning the quantum of damages. Yet, it has to be asked if this is the kind of knowledge and technique model that should be underpinning the courses at a university law school. One only has to read a judgment like the one delivered by Bingham LJ in Blackpool and Fylde (p 436)—or, indeed, the judgments in a range of other cases extracted in the chapters which follow—to see that there might be more to legal technique than learning vast numbers of detailed rules and precedents. Might it not be more important to place the emphasis on the kind of structural patterns used by jurists in the analysis of facts? How might a German, a French and an English jurist—indeed even, on occasions, a Roman lawyer—conceptualise the problem in Rigby or in Esso Petroleum v Southport? Might it not be more valuable to teach the kind of argumentation techniques employed by lawyers, rather than forcing students to learn the minute details of the law of damages? This is not to prefer, in some abstract way, one type of knowledge over the other. The point is that there are different knowledge models, depending upon the category of lawyer. Thus, the judge uses a different knowledge model from the legislator, and these two categories of jurist are in turn to be differentiated from the academic lawyer.27 A sourcebook on the law of obligations will hopefully be judged for the scope of its vision, rather than for the inadequacy of its textual database. A third point to be stressed is that the professional bodies themselves seem to be stressing the importance of the foundational subjects as vehicles, inter alia, to teach the wider aspects of law as a discipline.28 Few, surely, would argue that courses on contract, tort or restitution are in the law school curriculum simply to convey a descriptive knowledge of the texts and cases within these categories. In addition to laying the foundations of liability, they are courses that should be familiarising the student with legal method, the legal system, legal remedies and even the foundations of legal theory and philosophy. Naturally, one does not wish to overexaggerate these aspects to the detriment of the foundations of contract, tort and restitution. Moreover, there are other contextual aspects, such as law-and-economics or law-andsociety, that could equally be emphasised. Yet, it is in the end a question of balance: the European, the methodological and the institutional are dimensions
27 28
Atias, Épistémologie du droit, 1994, PUF, pp 21–28. Law Society and Council of Legal Education, ‘Announcement on full-time qualifying law degrees’, January 1995, set out in ACLEC, First Report on Legal Education and Training, 1996, pp 137–42. See, now, Joint Statement on Qualifying Law Degrees Issued by the Law Society and General Council of the Bar, Sixth Draft, 1999.
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that will be of increasing importance as the English legal system becomes, for better or for worse, more integrated into the other systems of Europe. The chapters which follow will, accordingly, attempt to prepare today’s students for tomorrow’s Europe, in which pressures for harmonisation will probably not have decreased.
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CHAPTER 1
THE STRUCTURE OF THE COMMON LAW
The purpose of this first chapter is to set the law of obligations in the context of the common law as a whole. On the continent, a legal system is constructed through codes, which organise the law into highly systematic bodies of principles and rules. The various codes themselves define a particular domain: private law, civil procedure, criminal law, criminal procedure, and so on. In turn, each of these codes is subdivided into books, chapters and sections. The law of obligations can thus be located and identified through its relationship with other categories of the law; these categories can equally be related to the courts, to remedies and to the role of the various personnel via codes of procedure. The system is easily seen as fitting together as a whole. The common law, by contrast, seems amorphous; there are no great codes and the whole court system appears more often to be the result of historical accident than rational planning. In truth, there is a structure hidden beneath the apparent disorder of statutes and cases, and an appreciation of this structure is important for an ultimate understanding of civil liability.
1 INTRODUCTION In order to appreciate this structure, it is helpful to see law as a system which functions at several levels. At the level of the rules themselves, the structure of the system focuses around the elements of persons, things and actions; that is to say, rules attach themselves to people, to things or to actions (remedies). For example, s 13 of the Supply of Goods and Services Act 1982 states that ‘…the supplier will carry out the service with reasonable care and skill’ (emphasis added), whereas s 9 states that ‘the goods supplied under the contract are of satisfactory quality’ (emphasis added). In s 37 of the Supreme Court Act 1981, it is stated that the ‘High Court may…grant an injunction …in all cases in which it appears to the court to be just and reasonable to do so’ (emphasis added). These elements of persons, things and actions are central to legal science, because they act as the bridges between the world of social fact and the world of law. Persons and things (if not actions) have a meaning both for the lawyer and for the sociologist. In addition, the institutional emphasis can help determine the nature of the duty. In s 13, where the emphasis is on the person, it is the nature of the behaviour that will determine liability (liability for fault). However, in s 9, which focuses on the thing, failure to supply goods that are reasonably fit or of satisfactory quality is strict; if thegoods are 1
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unfit, there is liability irrespective of any fault on behalf of the supplier (see Frost v Aylesbury Dairy, p 47). At another level, however, law functions as a political and social institution, which requires it to focus around elements that stretch beyond individual persons and things to embrace the institutions of society itself. At this level, law is a matter of courts, judges, legislators and parties as a class. Accordingly, before one can understand the operation of particular areas of legal rules, it is first important to have some grasp of the role of the various social and political institutions as rule and decision makers. For between the law as social system and the law as institutional system, there is the reasoning system of the politicians and jurists themselves. This reasoning system acts, once again, as a bridge between social fact and legal conceptualisation.
2 THE ROLE OF THE COURTS Perhaps the central social institution of the law, for the English obligations lawyer at any rate, is the court. The foundations of contract, tort and restitution are to be found in case law and not in a statutory code of abstract principles (although this is not to underestimate the role of statute). On the continent, things appear a little different, since it is the legislator who has pride of place in the social and political system; the starting point of any form of liability will normally be an article in a code. Yet, one should not exaggerate the codes as sources of law. The case law and doctrine interpreting the codes are now more important (if unofficial) sources than the code articles themselves. It would not now be unreasonable to say that, throughout Europe, the essence of the law of obligations is to be found in decided cases. Equally, the role of Parliament as law maker in the United Kingdom must never be underestimated. Whole areas of law—for example, real property, company law and consumer credit—are founded on statutes, and an increasing number of topics in the law of obligations have attracted statutory intervention. Statutory interpretation is a central skill for all jurists in Europe. However, the English lawyer’s habit of focusing upon remedies means that it is the facts of litigation that often form the starting point for thinking about contract and tort and litigation entails parties, lawyers and judges. What role do these judicial persons, and the social institutions in which they function, play in the development of the law of obligations?
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(a) Trial judge Derby and Co v Weldon (No 5) [1989] 1 WLR1244, Chancery Division Vinelott J:… The function of a judge of first instance is to find the relevant facts and, with the assistance of counsel, to ascertain the law as set out in any relevant statutory provisions and in principles to be derived from the decisions of the House of Lords and the Court of Appeal, and to draw the appropriate legal consequences. It is not open to the judge in performing this primary function to consider, far less express an opinion, as to the correctness of a decision of the Court of Appeal or the House of Lords except in those rare cases where he is faced with conflicting decisions of the Court of Appeal and must choose which to follow. That does not rest solely upon the feelings of deference and respect which a judge of first instance will naturally and properly approach a decision of the Court of Appeal or the House of Lords. An opinion which the judge may entertain as to the correctness or otherwise of, for instance, the interpretation of a decision of the House of Lords by the Court of Appeal, is simply irrelevant to his primary duty which is to ascertain the statutory provisions and the principles stated in decisions that are binding on him which govern the case before him…
Notes and questions 1
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These judicial observations may seem unexceptional. However, on closer inspection, a couple of points are worthy of comment. First, as the judge hints, it is not solely the judges who make law; counsel equally have their input. Indeed, perhaps it is counsel more than the judges who determine the shape of the law of obligations, since it is they and not the judges who do the research and frame the issues. Could it be said, then, that the idea of judge made law is misleading? Can judges carry out their own research, or do they have to decide points of law only on cases cited to them? Secondly, the judge is making an assumption about the nature of legal knowledge. Law is a matter of statutory rules and case law principles. Knowledge of law, in other words, is about knowledge of propositions. Yet, is law simply about rules and principles? Are legal propositions really capable of governing factual situations? As one French jurist has observed, ‘the passage from general rule—or from previous decision—to the solution of a concrete case cannot be analysed into a simple deductive application process; the subsuming of the actual case under the rule brings into play a multitude of circumstances, elements and variables which prevent anyone from claiming with certainty its result’ (Atias, Épistémologie du droit, 1994, PUF, p 119). One question, therefore, that will continually need to be considered throughout this sourcebook is the extent to which cases (and statutes) are objectively binding on judges. Are legal propositions really capable of governing factual situations? Are there correct and incorrect decisions in law? What is meant by a wrong decision?
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Sourcebook on Obligations and Remedies Hickman v Peacey [1945] AC 304, HL Viscount Simon LC:… [A] sharp distinction must be drawn between reaching a correct conclusion in a court of law, and establishing an absolute scientific truth. A court of law, whether it takes the form of a judge sitting alone, or sitting with the help of a jury, is not engaged in ascertaining ultimate verities: it is engaged in determining what is the proper result to be arrived at, having regard to the evidence before it. In most cases, there is a contest, and the court merely has to decide between the parties. And in reaching its conclusion, the court is greatly helped by considering upon which party rests the burden of establishing its contention. The conclusion, therefore, that the party upon which the burden rests has not proved an essential proposition, leads to the result that for the purposes of that litigation the proposition is to be rejected— a course of reasoning which could never establish a positive truth of science…
Notes and questions 1
2
This distinction between law and science may seem self-evident. But in the context of Europe, it is not quite so simple, since one important aspect of the civilian tradition is the idea of law as a science (scientia iuris). The codes were originally envisaged as propositional axioms analogous to mathematical axioms; the judge was little more than a machine or calculator (juge automate) automatically applying these axioms to factual situations. One talked of the mos geometricus (see Wieacker, A History of Private Law in Europe, 1995, OUP (trans Weir), pp 254ff). The law was thus to be viewed like any other science. Few continental lawyers subscribe to this thesis today. Yet, many jurists on both sides of the Channel still dream of law as something of an inference tool; that is to say, a model from which solutions can be arrived at in some kind of objective way (see, for example, Birks (1996) 26 UWAL Rev 1). Of course, there will be gaps in the system, and these gaps mean that interpretation and argumentation are the key methods, but for many theorists, such interpretation is not to be identified with discretion. It is to be disciplined by a ‘scientific’ and ‘logical’ mentality. Viscount Simon talks of scientific truths. However, do scientists today actually see their work in terms of discovering truths? Or (perhaps like lawyers?) do they construct contingent models that simply explain and predict? There are several reasons why the common lawyer has never really subscribed to the notion of law as science. The absence of a university tradition in English law until this century is one, but the jury is another. Until relatively recently, there were juries in all private law cases heard in the common law courts and jurors never had to give reasons for their decisions. Their job was to decide questions of fact, and how they arrived at their decisions was outside of the scope of legal science. Juries are still to be found in one area of the law of obligations, the law of defamation (see John v MGN, p 685). What if it is discovered that a jury reached its
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3
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decisionby throwing a dice or consulting an astrological chart? (Cf R v Young [1995] QB 324.) If a plaintiff is able to establish that there is a 51% probability that the defendant’s wrong caused his injury, ought the plaintiff to succeed (assuming all the other requirements for a cause of action are satisfied)? Is it true to say that a court of law is never engaged in any search for truth? Jones v National Coal Board [1957] 2 QB 55, CA Denning LJ:…No one can doubt that the judge, in intervening as he did, was actuated by the best motives… Nevertheless we are quite clear that the interventions, taken together, were far more than they should have been. In the system of trial which we have evolved in this country, the judge sits to hear and determine the issues raised by the parties, not to conduct an investigation or examination on behalf of society at large, as happens, we believe, in some foreign countries. Even in England, however, a judge is not a mere umpire to answer the question: “How’s that?” His object, above all, is to find out the truth, and to do justice according to the law; and in the daily pursuit of it the advocate plays an honourable and necessary role… So firmly is all this established in our law that the judge is not allowed in a civil dispute to call a witness whom he thinks might throw some light on the facts… So also it is for the advocates, each in his turn, to examine the witnesses, and not for the judge to take it on himself lest by so doing he appear to favour one side or the other… The judge’s part in all this is to hearken to the evidence, only himself asking questions of witnesses when it is necessary to clear up any point that has been overlooked or left obscure; to see that the advocates behave themselves seemly and keep to the rules laid down by law; to exclude irrelevancies and discourage repetition; to make sure by wise intervention that he follows the points that the advocates are making and can assess their worth; and at the end to make up his mind where the truth lies. If he goes beyond this, he drops the mantle of a judge and assumes the robe of an advocate; and the change does not become him well…
Notes and questions 1
2
‘The only interest and duty of the judge is to seek to do justice in accordance with the law. The interest of the parties is to seek a favourable decision and their duty is limited to complying with the rules of the court, giving truthful testimony and refraining from taking positive steps to deceive the court’ (Sir John Donaldson, Abse v Smith [1986] 1 QB 536, p 545). Is a judge, as Denning LJ seems to claim, under any duty to search for the truth? Ought judges to have to rely upon the parties when it comes to expert witnesses, cross-examination, etc, or should they be able to take a more active role? Denning LJ says that the judge who goes beyond the passive role assumes the role of an advocate. Does this mean that all 5
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civilianjudges—who do have much more active roles than their common law brethren—are not true judges, but partisan advocates? Professor Jolowicz once observed how the disappearance of the jury in civil cases (defamation remains an exception) has hardly affected the procedural structure of litigation; one has to imagine that a jury still exists. Why do you think the jury has largely disappeared from non-criminal cases and why do you think that its ghost remains? If the judge does not represent society, who does he or she represent when hearing a case? C (A Minor) v DPP [1996] AC 1 Queen’s Bench Division and House of Lords Laws J (QBD):… But antiquity of itself confers no virtue upon the legal status quo. If it did, that would assault one of the most valued features of the common law, which is its capacity to adapt to changing conditions. The common law is not a system of rigid rules, but of principles, whose application may alter over time, and which themselves may be modified. It may, and should, be renewed by succeeding generations of judges, and so meet the needs of a society that is itself subject to change… … [T]he rules as to stare decisis provide a crucial counterpoint to the law’s capacity for change: apparently established principles are not to be altered save through measured deliberation of a hierarchical system. First instance courts do not, on the whole, effect root and branch changes to legal principle, since if they were permitted to do so legal certainty, which is at least as important as legal adaptability, would be hopelessly undermined. But the Divisional Court is in a peculiar position. In point of hierarchy, it is a first instance court, an arm of the Queen’s Bench Division. But it is also an appellate court for cases like the present; and in such cases there is no appeal from its decisions save to the House of Lords… Lord Lowry (House of Lords):… It is hard, when discussing the propriety of judicial law-making, to reason conclusively from one situation to another,…I believe, however, that one can find in the authorities some aids to navigation across an uncertainly charted sea. (1) If the solution is doubtful, the judges should beware of imposing their own remedy. (2) Caution should prevail if Parliament has rejected opportunities of clearing up a known difficulty or has legislated, while leaving the difficulty untouched. (3) Disputed matters of social policy are less suitable areas for judicial intervention than purely legal problems. (4) Fundamental legal doctrines should not be lightly set aside. (5) judges should not make a change unless they can achieve finality and certainty… It is always a worry, at any level of adjudication, when what is thought to be the law and what is alleged to represent common sense do not appear to coincide…
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Questions 1 2 3 4
Does Laws J have a different view of the role of a first instance judge than Vinelott J (in Derby v Weldon)? Are judges under a duty to bring, if at all possible, the law into line with common sense? Would a lawyer from a codified system ever see law and legal reason in terms of ‘navigation across an uncertainly charted sea’? Is Lord Lowry’s view of the judicial role too restrictive in comparison with the role of judges in other EU jurisdictions?
(b) Court of Appeal Viscount de L’Isle v Times Newspapers [1988] 1WLR 49 Court of Appeal Balcombe LJ:… An appeal to the Court of Appeal is by way of rehearing: see RSC Ord 59 r 3(1). Unlike those cases where statute limits the right of appeal to a question of law, this court in a case such as the present has the right, and indeed the duty, to review the decision of the judge at first instance both on law and on fact. In doing so, it will, of course, follow certain well-established principles. Thus, it will not normally interfere with a finding of fact by the judge of first instance, where that finding depends on the credibility of a witness whom the judge has observed giving evidence. Again, an appellate court may interfere with the exercise of a discretion by a judge of first instance only if it is satisfied that the judge has erred in certain well-defined respects… But, subject to the established limitations, this court can and should be prepared to review the decision of a judge of first instance, both as to law and as to fact… Watt or Thomas v Thomas [1947] AC 484 House of Lords Viscount Simon:… If there is no evidence to support a particular conclusion (and this is really a question of law), the appellate court will not hesitate so to decide. But if the evidence as a whole can reasonably be regarded as justifying the conclusion arrived at the trial, and especially if that conclusion has been arrived at on conflicting testimony by a tribunal which saw and heard the witnesses, the appellate court will bear in mind that it has not enjoyed this opportunity and that the view of the trial judge as to where credibility lies is entitled to great weight… I would only add that the decision of an appellate court whether or not to reverse conclusions of fact reached by the judge at the trial must naturally be affected by the nature and circumstances of the case under consideration. What I have said applies to appeals from a judge sitting alone. Conclusions of fact embodied in the verdict of a jury cannot be subjected to the same degree of re-examination—for the course of reasoning by which the verdict has been reached is not disclosed—and consequently the verdict of a jury on fact must stand if there was any evidence to support it and if the conclusion is one at which a reasonable jury when properly directed might reasonably arrive…
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Questions 1 2
3 4
What is meant by a ‘rehearing’? Can the Court of Appeal hear witnesses? If so, could the appeal judges question these witnesses in any depth? (Cf Practice Direction (Court of Appeal (Civil Division)) [1999] 1 WLR 1027.) What is the role of the Court of Appeal in English law? (Cf Practice Direction, above.) Can appeal judges decide cases on points of law not raised by the parties? What if they feel that a plaintiff has pleaded a case in the wrong sort of way? (Cf Esso v Southport, p 216 and CTN Cash and Carry v Gallaher, p 504.) Roberts Petroleum Ltd v Bernard Kenny Ltd [1983] 2 AC 192 House of Lords Lord Diplock:… I do desire, however, to comment upon the use sought to be made both in this House and in the Court of Appeal of previous judgments of that court which do not appear in any series of published law reports. This is a growing practice and one which, in my view, ought to be discouraged. Transcripts of the shorthand notes of oral judgments delivered since April 1951 by members of the Court of Appeal, nearly all extempore, have been preserved at the Royal Courts of Justice, formerly in the Bar Library but since 1978 in the Supreme Court library. For much of this period this course has been followed as respects all judgments of the civil division of the Court of Appeal, though recently some degree of selectivity has been adopted as to judgments to be indexed and incorporated in the bound volumes. Unreported judgments which have been delivered since the beginning of 1980 are now also included in the computerised database known as Lexis and this has facilitated reference to them. Two such transcripts are referred to in the judgment of the Court of Appeal in the instant case. One of these was a case, Hudson’s Concrete Products Ltd v DB Evans (Bilston) Ltd, to which my noble and learned friend refers, which had been the subject of a note in the Solicitors’ Journal (1961) 105 SJ 281. The other had not been noted in any professional journal, nor had either of the two additional transcripts to which your Lordships were referred at the hearing in this House. For my part, I gained no assistance from perusal of any of these transcripts. None of them laid down a relevant principle of law that was not to be found in reported cases; the only result of referring to the transcripts was that the length of the hearing was extended unnecessarily. This is not surprising. In a judgment, particularly one that has not been reduced into writing before delivery, a judge, whether at first instance or upon appeal, has his mind concentrated upon the particular facts of the case before him and the course which the oral argument has taken. This may have involved agreement or concessions, tacit or explicit, as to the applicable law, made by counsel for the litigating parties in what they conceived to be the interests of their respective clients in obtaining a favourable outcome of the particular case. The primary duty of the Court of Appeal on an appeal in any case is to determine the matter actually in dispute between the parties. Suchpropositions 8
The Structure of the Common Law of law as members of the court find necessary to state and previous authorities to which they find it convenient to refer in order to justify the disposition of the actual proceedings before them will be tailored to the facts of the particular case. Accordingly, propositions of law may well be stated in terms either more general or more specific than would have been used if he who gave the judgment had in mind somewhat different facts, or had heard a legal argument more expansive than had been necessary in order to determine the particular appeal. Even when making successive revisions of drafts of my own written speeches for delivery upon appeals to this House, which usually involve principles of law of wider application than the particular case under appeal, I often find it necessary to continue to introduce subordinate clauses supplementing, or qualifying, the simpler, and stylistically preferable, wording in which statements of law have been expressed in earlier drafts. There are two classes of printed law reports: the two weekly series of general law reports: (a) the Weekly Law Reports of the Incorporated Council of Law Reporting, of which the more important, contained in Parts 2 and 3, are later reproduced in the Law Reports proper, together with a summary of the arguments of counsel, and (b) the All England Law Reports which report much the same cases as the former series; these do not err on the side of overselectivity. Then there are the various series of specialised law reports which seem to have proliferated in the course of the last few decades; these may be useful in helping lawyers practising in specialised fields to predict the likely outcome of the particular case in which they are advising or instituting proceedings, by seeing how previous cases in which the facts were in various respects analogous were actually decided; but these specialised reports contain only a small minority of leading judgments in which some new principle of law of general application in the specialised field of law is authoritatively propounded, as distinct from some previously accepted principle being applied to the facts of a particular case. If a civil judgment of the Court of Appeal (which has a heavy case load and sits concurrently in several civil divisions) has not found its way into the generalised series of law reports or even into one of the specialised series, it is most unlikely to be of any assistance to your Lordships on an appeal which is sufficiently important to reach this House. My Lords, in my opinion, the time has come when your Lordships should adopt the practice of declining to allow transcripts of unreported judgments of the Civil Division of the Court of Appeal to be cited upon the hearing of appeals to this House unless leave is given to do so; and that such leave should only be granted upon counsel’s giving an assurance that the transcript contains a statement of some principle of law, relevant to an issue in the appeal to this House, that is binding upon the Court of Appeal and of which the substance, as distinct from the mere choice of phraseology, is not to be found in any judgment of that court that has appeared in one of the generalised or specialised series of reports.
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Notes and questions 1
2 3
How is a law reporter to know if a case is one of principle? At the time of the giving of the judgments, did (for example) Mint v Good (p 675) seem an important case of principle? Is an unreported case incapable of acting as a precedent? ‘[T]he Divisional Court…is not called a court of appeal for in my opinion it is not such a court. It is, generally speaking, a court of review having wide powers to countermand the decisions of others no matter where those decisions emanate from, be it below the High Court or outside the courts altogether. It should therefore, in my judgment, be regarded as sui generis, for such it is. At times, depending on the function it is exercising, I dare say it could, practically speaking, be called a Court of Appeal, at other times clearly not. What I am confident it can never, in any circumstances, be called is a court of first instance’ (Watkins LJ in R v Leeds County Court ex p Morris [1990] 1 QB 523, p 531). What is the difference between a court of review and a Court of Appeal? Is a Divisional Court a public (rather than private) law court?
(c) House of Lords Miliangos v George Frank (Textiles) Ltd [1976] AC 443 House of Lords Lord Wilberforce:… The law on this topic is judge made; it has been built up over the years from case to case. It is entirely within this House’s duty, in the course of administering justice, to give the law a new direction in a particular case where, on principle and in reason, it appears right to do so. I cannot accept the suggestion that because a rule is long established only legislation can change it—that may be so when the rule is so deeply entrenched that it has infected the whole legal system, or the choice of a new rule involves more farreaching research than courts can carry out… Lord Simon (dissenting):… Law is too serious a matter to be left exclusively to judges… [T]he training and qualification of a judge is to elucidate the problem immediately before him, so that its features stand out in stereoscopic clarity. But the beam of light which so illuminates the immediate scene seems to throw surrounding areas into greater obscurity; the whole landscape is distorted to the view. A penumbra can be apprehended, but not much beyond; so that when the searchlight shifts a quite unexpected scene may be disclosed. The very qualifications for the judicial process thus impose limitations on its use. This is why judicial advance should be gradual. ‘I am not trained to see the distant scene: one step is enough for me’ should be the motto on the wall opposite the judge’s desk. It is, I concede, a less spectacular method of progression than somersaults and cartwheels; but it is the one best suited to the capacity and resources of a judge. We are likely to perform better the duties society imposes on us if we recognise our limitations. Within the proper limits there is more than enough to be done which is of value to society… 10
The Structure of the Common Law
There are three more general questions which are raised by this important appeal. (1) Overruling…involves that the law must be deemed always to have been as my noble and learned friends now declare it. This may affect the vires of some rules of court; but beyond this there has been, so far as I can see, no consideration of what consequences the retrospective alteration of the law (for, let us face it, that is the reality) may have. I would be more ready to go along with my noble and learned friends if the decision had prospective effect only. One of the several reasons why radical law reform is in general more appropriately carried out by Parliament is that a statute can (and usually does) operate prospectively. I venture once again to plead that consideration should be given to the various forms of prospective overruling, such as obtain in some other common law systems. (2) The type of law reform by judiciary which is here exemplified, and which has been exemplified in some other recent cases, is a very considerable social responsibility. Of course, no worthwhile judge is afraid of responsibility. But I presume to suggest that consideration should be given to the desirability of the Lords of Appeal sitting in banc in such circumstances—at least where the overruling of a recent decision of your Lordships’ House is in question. (3) The main ground of my dissent from the opinions of my noble and learned friends is that this type of issue is unsuitable for law reform by judiciary. It is the sort of case where, in my view, a wide range of advice, official especially but also commercial, is required. The training and experience of a judge is unsuitable for this type of decision making unaided: his circumspection is too narrow; his very qualities of keen perception of his immediate problem tend to militate against sound judgment of the wider and more general issues involved. But if the courts are to undertake legislative responsibilities, something might be done to equip them better for the type of decision making which is involved. Official advice and a balanced executive view might be made available by a law officer or his counsel acting as amicus curiae. I venture to suggest consideration of some such machinery.
Westdeutsche Landesbank Girozentrale v Islington LBC [1996] AC 669 House of Lords (See also p 799.) Lord Goff (dissenting):… In the present case,…it is not the function of your Lordships’ House to rewrite the agenda for the law of restitution, nor even to identify the role of equitable proprietary claims in that part of the law. The judicial process is neither designed for, nor properly directed towards, such objectives. The function of your Lordships’ House is simply to decide the questions at issue before it in the present case… It is a truism that, in deciding a question of law in any particular case, the courts are much influenced by considerations of practical justice, and especially by the results which would
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flow from the recognition of a particular claim on the facts of the case before the court… As a matter of practical justice,… it was to achieve justice that the House [in Sinclair v Brougham] had recourse to equity to provide the answer. It is, I think, apparent from the reasoning of the members of the Appellate Committee that they regarded themselves, not as laying down some broad general principle, but as solving a particular practical problem… …I regard the decision in Sinclair v Brougham as being a response to that problem in the case of ultra vires borrowing contracts, and as not intended to create a principle of general application. From this it follows, in my opinion, that Sinclair v Brougham is not relevant to the decision in the present case. In particular it cannot be relied upon as a precedent that a trust arises on the facts of the present case, justifying on that basis an award of compound interest against the council…
Notes and questions 1
2
3
4
‘Your Lordships’ task in this House is to decide particular cases between litigants and your Lordships are not called upon to rationalise the law of England. That attractive if perilous field may well be left to other hands to cultivate… Arguments based on legal consistency are apt to mislead for the common law is a practical code adapted to deal with the manifold diversities of human life, and as a great American judge has reminded us, “the life of the law has not been logic; it has been experience”’ (Lord Macmillan in Read v J Lyons and Co [1947] AC 156, p 175). Upon whom, then, is the task of rationalising the law of England? ‘In a contest purely between one litigant and another, such as the present, the task of the court is to do, and be seen to be doing, justice between the parties… There is no higher or additional duty to ascertain some independent truth?’ (Lord Wilberforce in Air Canada v Secretary of State for Trade [1983] 2 AC 394, p 438). Is it really realistic to treat the parties in this case as ordinary litigants involved in some private dispute? Is not the House of Lords diminishing its own role? How might the above judicial comments be affected by the Woolf Reforms introduced in 1999? (Cf Holland and Webb, Learning Legal Rules, 4th edn, 1999, Blackstone, pp 13–17.) The judicial extracts from the Miliangos case, together with the comments from other House of Lords cases, are set out not just in order to try to establish the role of the UK’s highest court. They are set out for comparative reasons. Jurists from civil law countries will, hopefully, glean from these extracts something of the mentality of the common lawyer. There is no notion here of the juge automate mechanically applying axioms to factual situations; the common law is conceived, instead, as a system of practical justice where the role of even the highest court is simply to decide particular cases as they come before the court. There is, of course, something fictional about this attitude just as there is about the juge automate. Nevertheless, 12
The Structure of the Common Law
5 6 7
8
the extracts ought to help explain why metaphors such as ‘uncharted seas’ are so easily applied to the common law. One question that the civilian might wish to ask is this. Is the mentality of the common lawyer too conservative to achieve much in the way of law reform? What is meant by prospective overruling? (Cf Kleinwort Benson v Lincoln CC, p21.) How can the executive make its view known in an English court? How might the role of a court influence the development of the law of obligations? If the duty of a trial or an appeal judge were to change, would this, in the longer term, lead to changes in legal thinking itself? Is Lord Simon saying that cases do not lay down general principles?
3 THE ROLE OF PRECEDENT On the continent, the civil codes are seen as providing both structure and stability to the law. In an uncodified system like English law, this structure and stability has, of course, to come from elsewhere and this is the reason why precedent assumes such importance in theory, if not so much in practice. It is important for law to appear as a rational discourse, and part of this rationality is to be found in its apparent ability to predict as well as to explain. Precedent thus becomes part of the science of the common law; it acts as the means of analysis of past decisions and the basis for predicting future decisions. In practice, the doctrine of precedent must be treated with a certain caution, since the methodology of distinguishing cases can always act as a means by which inconvenient authorities can be bypassed; and when this happens, the method of analysing cases needs to stretch beyond the precedent doctrine itself. One needs to look very closely at the reasoning methods used (cf Chapter 2) and the objectives (social, economic, political) of the relevant areas of law (cf, for example, Chapter 7). Qualcast (Wolverhampton) Ltd v Haynes [1959] AC 743 House of Lords Lord Somervell: My Lords, I also would allow the appeal. In the present case the county court judge, after having found the facts, had to decide whether there was, in relation to this plaintiff, a failure by the defendants to take reasonable care for his safety. It is, I think, clear from the passage cited by my noble and learned friend that he would have found for the defendants but for some principle laid down, as he thought, by the authorities, to which he referred. I hope it may be worthwhile to make one or two general observations on the effect on the precedent system of the virtual abolition of juries in negligence actions. Whether a duty of reasonable care is owed by A to B is a question of law… When negligence cases were tried with juries, the judge would direct them as to the law… The question whether on the facts in that particular case there was or was not a failure to take reasonable care was a question for the jury. 13
Sourcebook on Obligations and Remedies There was not, and could not be, complete uniformity of standard. One jury would attribute to the reasonable man a greater degree of prescience than would another. The jury’s decision did not become part of our law citable as a precedent. In those days, it would only be in very exceptional circumstances that a judge’s direction would be reported or be citable. So far as the law is concerned, they would all be the same. Now that negligence cases are mostly tried without juries, the distinction between the functions of judge and jury is blurred. A judge naturally gives reasons for the conclusion formerly arrived at by a jury without reasons. It may sometimes be difficult to draw the line, but if the reasons given by a judge for arriving at the conclusion previously reached by a jury are to be treated as ‘law’ and citable, the precedent system will die from a surfeit of authorities… Lord Denning:… The question that did arise was this: What did reasonable care demand of the employers in this particular case? That is not a question of law at all but a question of fact. To solve it the tribunal of fact—be it judge or jury—can take into account any proposition of good sense that is relevant in the circumstances, but it must beware not to treat it as a proposition of law… So here, this being a case governed by the common law and not by any statute or regulation, the standard of care must be fixed by the judge as if he were a jury, without being rigidly bound by authorities. What is ‘a proper system of work’ is a matter for evidence, not for law books. It changes as the conditions of work change. The standard goes up as men become wiser. It does not stand still as the law sometimes does. I can well see how it came about that the county court judge made this mistake. He was presented with a number of cases in which judges of the High Court had given reasons for coming to their conclusions of fact. And those reasons seemed to him to be so expressed as to be rulings in point of law: whereas they were in truth nothing more than propositions of good sense…
Notes and questions 1
2 3 4
We have already mentioned how the absent jury in private law continues to exert an influence. Perhaps this case provides a good example of how the roles of judge and jury must be properly understood before one can have a proper understanding of the modern law of contract and tort. Take the tort case of Bolton v Stone [1951] AC 850 (read it in the law report): in the days of judge and jury, would the point in issue have been one for the judge or one for the jury? What about Smith v Littlewoods (p 647)? Is the question of reasonable behaviour a matter of judicial intuition? Is it really realistic to say that decisions of fact will not influence future cases? Read Kopitoff v Wilson (1876) 1 QBD 377 in the law report. What was the role of a jury in a contract case?
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The Structure of the Common Law Knuller Ltd v DPP [1973] AC 435 House of Lords Lord Simon of Glaisdale:… In my view, the appeal turns on how far your Lordships are justified in altering the law as previously established. The sanction for your Lordships’ departure from a rule of law laid down by a previous decision of your Lordships’ House rests on an announcement made on 26 July, 1966, by Lord Gardiner LC with the approval of all the Lords of Appeal in Ordinary at that time [Practice Statement (Judicial Precedent) [1966] 1 WLR 1234]. The background to, the mode of, and the terms of, this announcement are all of importance to the decision of the instant appeal. Before that announcement there had been judgments in your Lordships’ House to the effect that your Lordships, sitting judicially, were bound by a previous decision of your Lordships’ House in that capacity… This was put on two grounds: first, that a decision of your Lordships’ House, sitting judicially, established the law in such a way that it was binding on all subjects of the Crown, including your Lordships, so that it could only be altered by a decision of the entire Parliament: Beamish v Beamish (1861) 9 HL Cas 274, especially p 338 (Lord Campbell); and, secondly, that such a rule was necessary in order to provide the law with desirable certainty: London Street Tramways Co Ltd v London County Council [1898] AC 375, especially p 380 (Lord Halsbury LC). The declaration of 26 July, 1966, was not made in the course of decision of a judicial appeal to your Lordships—even though it is in fact arguable that, notwithstanding anything said in previous cases, your Lordships are entitled at common law to depart from previous decisions: cf the judgment of the Supreme Court of the United States in Linkletter v Walker (1965) 381 US 618. Nor was the declaration of July 26, 1966, the subject matter of statutory enactment. But, since the announcement was made by the Lord Chancellor, it must be taken to have had general executive approval; nor was any objection raised elsewhere in Parliament. The new practice announced in the declaration of 26 July 1966 must, therefore, in my view, be considered to be one of those conventions which are so significant a feature of the British Constitution, as Professor Dicey showed in his famous work. But it follows, in my respectful submission, that the actual terms of the declaration must provide essential guidance to your Lordships in making use of the new freedom vouchsafed by it. These terms were as follows [1966] 1 WLR 1234: Their Lordships regard the use of precedent as an indispensable foundation upon which to decide what is the law and its application to individual cases. It provides at least some degree of certainty upon which individuals can rely in the conduct of their affairs, as well as a basis for orderly development of legal rules. Their Lordships nevertheless recognise that too rigid adherence to precedent may lead to injustice in a particular case and also unduly restrict the proper development of the law. They propose, therefore, to modify their present practice and, while treating former decisions of this House as normally binding, to depart from a previous decision when it appears right to do so. In this connection they will bear in mind the danger of disturbing retrospectively the basis on which contracts, settlements of property and fiscal arrangements have been entered into and also the especial need for certainty as to the criminal
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Sourcebook on Obligations and Remedies law. This announcement is not intended to affect the use of precedent elsewhere than in this House. I draw particular attention to the words ‘the especial need for certainty as to the criminal law’… Certainty is a desirable feature of any system of law. But there are some types of conduct desirably the subject matter of legal rule which cannot be satisfactorily regulated by specific statutory enactment, but are better left to the practice of juries and other tribunals of fact. They depend finally for their juridical classification not upon proof of the existence of some particular fact, but upon proof of the attainment of some degree… But, in any case, the type of ‘uncertainty’ invoked by the appellants is not that with which the declaration of 26 July 1966 [1966] 1 WLR 1234 was concerned. The context was the doctrine of precedent. The declaration was, in other words, concerned with that certainty which comes from following rules of law already judicially determined, not with any such certainty as may come from the abrogation of those judicially determined rules of law which involve issues of fact and degree… The Hannah Blumenthal [1983] 1 AC 854 Court of Appeal and House of Lords Lord Denning MR (Court of Appeal):… At the outset, there is this point. Is this court bound by the decision of the House of Lords in Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corporation Ltd [1981] AC 909? That was very like this. It was a case between German shipbuilders and Indian buyers. The contract there was governed by German law, but provided for arbitration in London. It included a time bar, barring any claim for defects. It barred them after 12 months. The claim went to arbitration in London. The alleged defects appeared in 1966. The arbitration was not started for five years. The buyers sought to overcome the time bar by saying that it did not apply to the arbitration in London. The arbitration dragged on so long that after 12 years, the German shipbuilders applied to stop the arbitration from going any further. Donaldson J [1981] AC 909, p 933, stopped it. So did this court consisting of myself and Roskill and Cumming-Bruce LJJ [1981] AC 909, p 961. Yet the House of Lords reversed us. It was by three against two. In a single judgment, the three allowed the arbitration to go on. It is, we are told, still going on, though it is now 16 years past. I remember, of course, the rebuke which Lord Hailsham of St Marylebone LC gave to us in Broome v Cassell and Co Ltd [1972] AC 1027, p 1054, when he said: …in the hierarchical system of courts which exists in this country, it is necessary for each lower tier, including the Court of Appeal, to accept loyally the decisions of the higher tiers. But that raises at once the question: what do you mean by the ‘decision’ of the higher courts? Presumably the reason for the decision. The ratio decidendi as the classicists call it. The reason which is necessary for the decision. It is binding on the lower courts. It is to be distinguished from the obiter dicta. These are the reasons which are not necessary for the decision. They are not binding on the lower courts. The task of distinguishing between them is formidable. Especially when there are four or five speeches and they each gave different reasons, as
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The Structure of the Common Law in Boys v Chaplin [1971] AC 356. Then ‘the ratio decidendi of the case must be somewhat speculative’: see Dicey and Morris, The Conflict of Laws, 10th edn, 1980, Vol 2, p 942; and the lower court can choose which it likes. To avoid this embarrassment there has been a marked tendency in recent years in the House of Lords for one of their Lordships to give a single speech and the others to concur. The object is, no doubt, to avoid the difficulties caused by different reasons given by different judges. This object is laudable enough. It is much to be commended in some cases. But it is apt to give rise to problems in others. It may be presumptuous of me to criticise but I make so bold as to indicate to their Lordships the problems to which a single judgment may give rise. Not often, but just occasionally, it makes it exceedingly difficult to discover what is the ratio decidendi of a case—as distinct from the obiter dicta. It is so difficult that often times the lower courts do not even attempt the task. They treat the words of the single judgment as binding authority. They treat them almost as if they were the words of a statute. So treated, the words are apt to lead lower courts astray. Whereas if there had been, not one single judgment, but three or four or five, it would have been much easier to separate the wheat from the chaff and to discover what was really the ratio decidendi—and therefore binding—as distinct from obiter dicta and not binding. As an instance of the problems created by a single judgment, I would draw attention to a few recent cases in which the obiter dicta have been treated as binding and have afterwards been discovered to be erroneous or to have given rise to an infinity of trouble. First, of course, Director of Public Prosecutions v Smith [1961] AC 290, on criminal intent, where I would have liked to deliver a separate judgment but was discouraged from doing so. The reasoning was at once much criticised by academic writers and was reversed by Parliament by s 8 of the Criminal Justice Act 1967. Next, Rookes v Barnard [1964] AC 1129 where, pp 1221–31, there was one single judgment on exemplary damages. It gave rise to the controversy in Broome v Cassell and Co Ltd [1972] AC 1027, where Lord Wilberforce gave a reasoned dissent from it, pp 1114–21. To these I would add the single judgment in American Cyanamid Co v Ethicon Ltd [1975] AC 396, on interlocutory injunctions, which has given rise to ceaseless misunderstandings in the lower courts, and had to be explained in NWL Ltd v Woods [1979] 1 WLR 1294, p 1306. Then to Lim Poh Choo v Camden and Islington Area Health Authority [1980] AC 174, where the House of Lords in a single judgment admitted that a radical reappraisal of the law was needed, but not one of them undertook the task—and it looks as if it never will be undertaken. There is also the single judgment in A/S Awilco of Oslo v Fulvia SpA di Navigazione ofCagliari [1981] 1 WLR 314, which has been severely criticised in the Law Quarterly Review: (1981) 97 LQR 379. By contrast, in the Court of Appeal, if we reverse the judgment of a judge below, our custom, save in exceptional cases, is for each member of the court to give his own reasons in his own words. We do it out of courtesy to him. But it is, in truth, not mere courtesy. It helps the judges of first instance to discover the ratio decidendi of the case.
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Sourcebook on Obligations and Remedies All this makes me regret very much that in Bremer Vulkan Schiffbau und Maschinenfabrik v South India Shipping Corporation Ltd [1981] AC 909 there was only one single judgment in the House of Lords—concurred in by two othersas against two fully reasoned judgments in the House, three in the Court of Appeal, and one at first instance.
(2) The ratio decidendi of Bremer Vulkan I turn, therefore, to the principal task - to find out the ratio decidendi of the single judgment in the Bremer Vulkan case, I take as my starting point the words of Lord Simon of Glaisdale in Lupton v FA and AB Ltd [1972] AC 634, p 658: ...what constitutes binding precedent is the ratio decidendi of a case, and this is almost always to be ascertained by an analysis of the material facts of the case - that is, generally, those facts which the tribunal whose decision is in question itself holds, expressly or implicitly, to be material. I find the material facts in the Bremer Vulkan case in the concluding words of Lord Diplock [1981] AC 909, p 987: In the instant case, however, as in Crawford v AEA Prowting Ltd [1973] QB 1, the respondents were content to allow the claimant to carry out voluntarily the preparation of detailed points of claim. They never made an application for directions to the arbitrator and none were made by him. For failure to apply for such directions before so much time had elapsed that there was a risk that a fair trial of the dispute would not be possible [both claimant and respondent were in my view in breach of their contractual obligations to one another; and neither can rely upon the other’s breach as giving him a right to treat the primary obligations of each to continue with the reference as brought to an end]. Respondents in private arbitrations are not entitled to let sleeping dogs lie and then complain that they did not bark’ [Emphasis and brackets added.] In that passage I would ask you to note the emphasis placed on the breach by the respondents—on their failure to apply for directions. That is the real ratio decidendi of the case. To illustrate this I have put brackets round the words which I suggest are obiter dicta. The reasoning in the passage would be just as cogent if there were substituted there these words: ‘the respondents were in my view in breach of their contractual obligations and cannot rely on the claimant’s breach as giving them the right to treat the arbitration as at an end.’ This shows that the material facts - to use the test of Lord Simon of Glaisdale were that the respondents had failed to apply for directions and were thus in breach of their contractual obligations. The respondents were not entitled to let sleeping dogs lie. It was quite immaterial that the claimants had failed to apply for directions. The sleeping dog was not bound to wake up and bark. But if it was bound to wake up and bark—meaning, if the claimants were bound to apply for directions—en it was not as a mutual obligation binding on both jointly. It was a separate obligation binding on each separately. Like the separate obligation on each side of a contract of sale. If one side is guilty of a repudiatory breach, the other can accept it, and vice versa.
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The Structure of the Common Law On this analysis I regard the ratio decidendi—the essential reason for the decision, as being that, on the facts of that case, the respondents were at fault themselves. They had not applied for directions as they should have done. They were disentitled—by their own conduct—from asking for an injunction to stop the arbitration. If I am right in regarding this as the ratio decidendi of the case, it follows that the observations about there being a ‘mutual obligation’ on each party were obiter dicta. They are not binding on lower courts. I have given my reasons in Andre et Compagnie SA v Marine Transocean Ltd [1981] QB 694, pp 700–02, for believing them to be erroneous; and in this I am reinforced by the judgment which Kerr LJ is about to give. The result in this case The present case on its facts is quite distinguishable from the facts in the Bremer Vulkan case. I see no fault whatever—no failure whatever—of the Norwegian sellers or their solicitors. I can see no reason why they should have tried to awaken the sleeping dog. No reason at all why they should have applied for directions. In point of law they could not have done so until a third arbitrator was appointed; and he never was appointed. It was not any failure of the Norwegian sellers, but the failure of the German buyers—which has made a fair trial impossible. The German buyers allowed over two years to elapse before they made any claim at all. Another eight months before they appointed an arbitrator. They never took any steps to appoint a third arbitrator. For three years they forgot all about the case. And the last word from them was when they said that they might need to amend their points of claim ‘at some stage in the future’. I cannot help thinking that these failures on their part were because they had no confidence in their claim. The exclusion clause is in all probability a complete answer to it… Another point While I was preparing my judgment in this case, another point occurred to me. It was simply this: the arbitration has never been commenced because the third arbitrator has never been appointed. The claim is, therefore, statute barred. Under s 27 of the Limitation Act 1939, the arbitration should have been commenced within six years. The cause of action accrued in December 1969. In 1972 each side appointed an arbitrator, but those two had no jurisdiction at all by themselves. Under the arbitration clause it was necessary for a third arbitrator to be appointed, not by the parties nor by the two arbitrators, but by a third person—the Baltic and International Maritime Conference in Copenhagen. In order to commence the arbitration, the German buyers ought to have requested the Baltic and International Maritime Conference in Copenhagen to appoint the third arbitrator. They never did so. The arbitration has, therefore, never been commenced. But this point was not taken before us. Nor was it argued. So all that I have said on it is obiter dicta and can, if desired, be discarded… Lord Roskill (House of Lords):… My Lords, I turn to consider the first reason which was advanced for urging that the decision in the Bremer Vulkan case
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Sourcebook on Obligations and Remedies should now be departed from. This submission when analysed amounts to no more than that this House, which by a majority rejected the conclusion of Donaldson J and the Court of Appeal, should now, less than two years later, say that the reasoning which led to that conclusion was wrong and that the reasons which appealed to the Court of Appeal and two of my noble and learned friends in this House should now be held to be the law. I have re-read all the judgments and speeches in the Bremer Vulkan case. It is apparent from their perusal that there were two possible views of the correct analysis of the nature of an arbitration agreement. One commanded the greater numerical support. The other commanded the support of the majority in this House. The law of this country is determined in this way and it was the latter view which prevailed. There are many cases where the common law of this country has been similarly determined. Two well known examples are Donoghue v Stevenson [1932] AC 562 and Bell v Lever Brothers Ltd [1932] AC 161. Each decision was subjected to considerable contemporary criticism. Each has stood the test of time and the former has been widely regarded as a milestone in the development of the law of negligence… In commercial law it is essential that the law should be certain. Your Lordships have recently re-asserted this principle on a number of occasions notably in cases arising from the alleged wrongful withdrawal of time chartered ships for supposedly unpunctual payment of hire. To review the Bremer Vulkan decision [1981] AC 909 would create not certainty but uncertainty. Were your Lordships to yield to the respondents’ submissions a few years have only to elapse and other litigants might hope to persuade a differently constituted appellate committee once again to reconsider the position and to restore the Bremer Vulkan decision to its present role… Lord Brightman (House of Lords): My Lords, I am in agreement with your Lordships, and I wish to add only a few words of emphasis of my own. I turn first to the sellers’ invitation that this House should depart from the conclusion which it reached less than two years ago in the Bremer Vulkan case [1981] AC 909. That is an invitation which I would unhesitatingly decline. Nothing has occurred since January 1981 in the field of arbitration to warrant such an inroad into the principle of ‘stare decisis’, described in R v Cunningham [1982] AC 566, p 581 as ‘the indispensable foundation of the use by your Lordships of the appellate jurisdiction of the House and its normal practice’. I appreciate that the decision in the Bremer Vulkan case may have caused alarm and despondency to respondents in moribund arbitration cases, by encouraging the attempted resuscitation of stale claims. But that is a transitory consequence of the decision. So far as the future is concerned, the decision introduces a sense of urgency into arbitration proceedings which is just as commendable there as it is in court proceedings. I would have thought that the parties themselves would welcome the incentive for speed which the Bremer Vulkan decision injects into their cases. I appreciate that some busy professional people may find this irksome, because speed tends to increase the weight of an overload of work, while deferment may sometimes ease the burden. This is a disadvantage to professional people which must be accepted. I cannot see that it is remotely unjust or unfair to tell respondents that if they suffer claimants to delay, they will lose the right to complain of that delay…
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The Structure of the Common Law [An appeal against the decision of the Court of Appeal was allowed.]
Questions 1 2
3
Where exactly did the House of Lords get its power to issue the Practice Direction of 1966? Was Lord Denning MR exceeding his powers in raising the limitation point without it having been argued in open court? Are judges entitled to use precedents in their judgments that have not been mentioned by either counsel in their arguments? Is the House of Lords giving preference to commercial certainty over justice? Kleinwort Benson Ltd v Lincoln City Council [1998] 3 WLR 1095 House of Lords (See also p 823.) Lord Goff:… Historically speaking, the declaratory theory of judicial decisions is to be found in a statement by Sir Matthew Hale over 300 years ago, viz, that the decisions of the courts do not constitute the law properly so called, but are evidence of the law and as such ‘have a great weight and authority in expounding, declaring and publishing what the law of this Kingdom is’: see Male’s Common Law of England, 6th edn, 1820, p 90. To the like effect, Blackstone Commentaries, 6th edn, 1774, pp 88–89, stated that ‘the decisions of courts are the evidence of what is the common law’. In recent times, however, a more realistic approach has been adopted, as in Sir George Jessel’s celebrated statement that rules of equity, unlike rules of the common law, are not supposed to have been established since time immemorial, but have been invented, altered, improved and refined from time to time: see In re Hallett’s Estate; Knatchbull v Hallett (1880) 13 Ch D 696, p 710. There can be no doubt of the truth of this statement; and we all know that in reality, in the common law as in equity, the law is the subject of development by the judges—normally, of course, by appellate judges. We describe as leading cases the decisions which mark the principal stages in this development, and we have no difficulty in identifying the judges who are primarily responsible. It is universally recognised that judicial development of the common law is inevitable. If it had never taken place, the common law would be the same now as it was in the reign of King Henry II; it is because of it that the common law is a living system of law, reacting to new events and new ideas, and so capable of providing the citizens of this country with a system of practical justice relevant to the times in which they live. The recognition that this is what actually happens requires, however, that we should look at the declaratory theory of judicial decision with open eyes and reinterpret it in the light of the way in which all judges, common law and equity, actually decide cases today. When a judge decides a case which comes before him, he does so on the basis of what he understands the law to be. This he discovers from the applicable statutes, if any, and from precedents drawn from reports of previous judicial decisions. Nowadays, he derives much assistance from academic writings in
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Sourcebook on Obligations and Remedies interpreting statutes and, more especially, the effect of reported cases; and he has regard, where appropriate, to decisions of judges in other jurisdictions. In the course of deciding the case before him he may, on occasion, develop the common law in the perceived interests of justice, though as a general rule he does this ‘only interstitially’, to use the expression of OW Holmes J in South Pacific Co v Jensen (1917) 244 US 2095, p 221. This means not only that he must act within the confines of the doctrine of precedent, but that the change so made must be seen as a development, usually a very modest development, of existing principle and so can take its place as a congruent part of the common law as a whole. In this process, what Maitland has called the ‘seamless web’, and I myself (The Search for Principle, Proc Brit Acad Vol LXIX (1983) 170, p 186) have called the ‘mosaic’, of the common law, is kept in a constant state of adaptation and repair, the doctrine of precedent, the ‘cement of legal principle’, providing the necessary stability. A similar process must take place in codified systems as in the common law, where a greater stability is provided by the code itself; though as the years pass by, and decided cases assume a greater importance, codified systems tend to become more like common law systems. Occasionally, a judicial development of the law will be of a more radical nature, constituting a departure, even a major departure, from what has previously been considered to be established principle, and leading to a realignment of subsidiary principles within that branch of the law. Perhaps the most remarkable example of such a development is to be found in the decisions of this House in the middle of this century which led to the creation of our modern system of administrative law. It is into this category that the present case falls, but it must nevertheless be seen as a development of the law, and treated as such. Bearing these matters in mind, the law which the judge then states to be applicable to the case before him is the law which, as so developed, is perceived by him as applying not only to the case before him, but to all other comparable cases, as a congruent part of the body of the law. Moreover, when he states the applicable principles of law, the judge is declaring these as constituting the law relevant to his decision. Subject to consideration by appellate tribunals, and (within limits) by judges of equal jurisdiction, what he states to be the law will, generally speaking, be applicable not only to the case before him but, as part of the common law, to other comparable cases which come before the courts, whenever the events which are the subject of those cases in fact occurred. It is in this context that we have to reinterpret the declaratory theory of judicial decision. We can see that, in fact, it does not presume the existence of an ideal system of the common law, which the judges from time to time reveal in their decisions. The historical theory of judicial decision, though it may in the past have served its purpose, was indeed a fiction. But it does mean that, when the judges state what the law is, their decisions do, in the sense I have described, have a retrospective effect. That is, I believe, inevitable. It is inevitable in relation to the particular case before the court, in which the events must have occurred some time, perhaps some years, before the judge’s decision is made. But it is also inevitable in relation to other cases in which the law as so stated will in future fall to be applied. I must confess that I cannot imagine how a common law system, or indeed any legal system, can
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The Structure of the Common Law operate otherwise if the law is be applied equally to all and yet be capable of organic change. This I understand to be the conclusion reached in Cross and Harris on Precedent in English Law, 4th edn, 1991, from which I have derived much assistance, when at p 33 they ask the question: ‘what can our judges do but make new law and how can they prevent it from having retrospective effect?’ This is also the underlying theme of Lord Coulsfield’s evidence to the Scottish Law Commission quoted in para 3.14 of their Discussion Paper No 99, Judicial Abolition of the Error of Law Rule and its Aftermath (1996) (which I have read with interest and respect) in which, in the light of the decision of the Inner House in Morgan Guaranty Trust Co of New York v Lothian Regional Council 1995 SC 151, and especially the notable judgment of my noble and learned friend Lord Hope of Craighead in that case, they reconsider and resile from their previous proposal that Scots law should adopt a ‘settled understanding of the law’ provision along the lines proposed by our own Law Commission. The only alternative, as I see it, is to adopt a system of prospective overruling. But such a system, although it has occasionally been adopted elsewhere with, I understand, somewhat controversial results, has no place in our legal system. I wish to add that I do not regard the declaratory theory of judicial decision, as I have described it, as an aberration of the common law. Since I regard it as an inevitable attribute of judicial decision making, some such theory must, I imagine, be applied in civil law countries, as in common law countries; indeed I understand that a declaratory theory of judicial decision applies in Germany, though I do not know its precise form…
Questions 1
2
How accurate is Lord Goff in saying that ‘codified systems tend to become more like common law systems’? Could it be said that the common law and civil law traditions are converging? (See Zimmermann and Jansen, ‘Quieta movere: interpretative change in a codified system’, in Cane and Stapleton (eds), The Law of Obligations, 1998, OUP, pp 285–315; cf Legrand, ‘European legal systems are not converging’ (1996) 45 ICLQ 52.) Is precedent simply a matter of cases, or do academic writing and Law Commission reports now form part of the common law?
4 THE ROLE OF PARLIAMENT It is easy to think, given the history of the law of obligations in Western law, that it is a subject that has its source in case law and doctrine (academic writing). As we have suggested, to an extent it does. Yet formally, in the civil law tradition, it is statute (the codes) that acts as the primary source of liability and although the common law remains uncodified it is, today at any rate, impossible to ignore legislation as a major primary source. This legislation, admittedly, is dependent on the notions and classification categories developed by the judges. So, for example, statute uses terms, often undefined in the Act, such as “contract’, “trespass to goods’, ‘negligence’, ‘conversion’ and the like 23
Sourcebook on Obligations and Remedies
(see Torts (Interference with Goods) Act 1977; Unfair Contract Terms Act 1977). But statute has intruded into so many particular factual areas that it has become possible to say that certain types of liability are now almost exclusively statute based. Thus, liability for things (cf Chapter 7) is now a form of liability that the courts are hesitant to develop themselves; it is something they prefer to leave to Parliament (see Cambridge Water, p 665). However, even where statute governs, the courts still have a major role to play in interpreting the words of the legislation, and this interpretative role is as important as any case law analysis (see Chapter 2). Does the word ‘offer’ in a statute mean the same as in a contract textbook? What objects are covered by the word ‘plant’ in a statute dealing with safety at work? Is a car park a ‘road’? In fact the approach towards legislation is often very similar to the one adopted by the courts in interpreting wills and contracts: the point in issue is what a particular word or phrase means in the context of a particular factual situation. Statute can also exert a negative influence. And so, in some recent cases, the courts have specifically refused to develop a common law principle on the basis that the factual situation has, in general, been taken into consideration by the legislator when formulating a statute (see, for example, Murphy v Brentwood DC [1991] 1 AC 398). In these situations, the courts often claim to be responding to the policy aspect that attaches to civil liability problems. However, the idea that the courts work in partnership with the legislator—an idea that forms part of the civil law tradition—is not something that is part of English legal history. Fisher v Bell [1961] 1 QB 394 Queen’s Bench Division Lord Parker CJ:… The sole question is whether the exhibition of that knife in the window with the ticket constituted an offer for sale within the statute. I think that most lay people would be inclined to the view (as, indeed, I was myself when I first read these papers), that if a knife were displayed in a window like that with a price attached to it, it was nonsense to say that was not offering it for sale. The knife is there inviting people to buy it, and in ordinary language it is for sale; but any statute must be looked at in the light of the general law of the country, for Parliament must be taken to know the general law. It is clear that, according to the ordinary law of contract, the display of an article with a price on it in a shop window is merely an invitation to treat. It is in no sense an offer for sale the acceptance of which constitutes a contract. That is clearly the general law of the country… In those circumstances I, for my part, though I confess reluctantly, am driven to the conclusion that no offence was here committed…
Notes and questions 1
This decision was altered by statute: did, then, the court give effect to the will of Parliament? Was it logically necessary to use the law of contract to decide a criminal case? 24
The Structure of the Common Law
2
3
4
‘I must confess to having felt some attraction for this approach, as a matter of logic; but I have come to the conclusion that its practical consequences are such that I do not think that it can have been the intention of the legislature so to provide’ (Lord Goff in The Derbyshire [1988] AC 276, p 302). If Lord Goff had to decide Fisher v Bell, would he have arrived at the same conclusion as Lord Parker? ‘The duty of the courts is to ascertain and give effect to the will of Parliament as expressed in its enactments. In the performance of this duty the judges do not act as computers into which are fed the statute and the rules for the construction of statutes and from whom issue forth the mathematically correct answer. The interpretation of statutes is a craft as much as a science and the judges, as craftsmen, select and apply the appropriate rules as the tools of their trade. They are not legislators, but finishers, refiners and polishers of legislation which comes to them in a state requiring varying degrees of further processing’ (Donaldson J in Corocraft Ltd v Pan-American Airways [1969] 1 QB 616, p 638). What is the difference between a craftsman and a scientist? Do they operate according to quite different theories? ‘There may be very sound social and political reasons for imposing upon local authorities the burden of acting, in effect, as insurers that buildings erected in their areas have been properly constructed in accordance with the relevant building regulations. Statute may so provide. It has not done so and I do not, for my part, think that it is right for the courts not simply to expand existing principles but to create at large new principles in order to fulfil a social need in an area of consumer protection which has already been perceived by the legislature but for which, presumably advisedly, it has not thought it necessary to provide’ (Lord Oliver in Murphy v Brentwood DC [1991] 1 AC 398, p 491–92). Are these the words of a craftsman or a scientist? X (Minors) v Bedfordshire County Council [1995] 2 AC 633 House of Lords (See also p 727.) Lord Jauncy:… Where a statute confers a private law right of action a breach of statutory duty howsoever caused will found the action. Where a statute authorises that to be done which will necessarily cause injury to someone no action will lie if the act is performed with reasonable care. If, on the other hand, the authorised act is performed carelessly whereby unnecessary damage is caused a common law action will lie. This is because the act would, but for the statute, be actionable at common law and the defence which the statute provides extends only to the careful performance of the act. The statute only authorises invasion of private rights to the extent that the statutory powers are exercised with reasonable and proper regard for the holders of such rights. Thus, careless performance of an authorised act rather than amounting to breach of a new duty simply ceases to be a defence to a common law right of action. 25
Sourcebook on Obligations and Remedies Where a statute empowers or ordains the doing of an act which, if done with due care, will cause no harm to a third party but which, if done carelessly will be likely to cause harm, and the circumstances also satisfy the other two requirements in Caparo Industries plc v Dickman [1990] 2 AC 605, namely that the relationship between plaintiff and defendant is sufficiently proximate and that it would be just and reasonable to impose a duty of care, an action will lie at common law. But it will lie simply because careless performance of the act amounts to common law negligence and not because the act is performed under statutory authority. Thus, the owners of a National Health Service Hospital owe precisely the same duty of care to their patients as do the owners of a private hospital and they owe it because of the common law of negligence and not because they happen to be operating under statutory provisions. Conversely an act which, if performed in a particular manner by a private individual, would give rise to no cause of action will no more be actionable if it happens to be performed in the same way in exercise of a statutory power or duty, breach of which does not confer a private law right of action, even if such performance is careless.
Questions 1
2
The torts of negligence and breach of statutory duty were once quite separate causes of action. They represented the distinction between a wrongful and an unlawful act. Are they still quite separate causes of action? (Cf Chapter 7.) Do owners of an NHS hospital owe precisely the same duty to a patient as a private hospital? If a private hospital carelessly causes pure economic loss to a private patient why should the patient not recover this money in an action for breach of contract against the hospital? (Cf Chapters 3 and 6.)
5 THE ROLE OF INSTITUTIONS The word ‘Institution’ is generally applied to physical manifestations of the law such as courts, the police and the judiciary. But people and things are also physical manifestations of the law since, as the Romans recognised, all law is focused around personae and res (and actiones) (Dig 1.5.1). Institutions thus have a central role with respect not just to the construction of the law but to problem solving in the whole of private and public law. For institutions, in this sense, act as the bridges between the world of law and the world of fact.
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(a) The institutional system Samuel G, The Foundations of Legal Reasoning, 1994, Maklu, pp 171–78 (footnotes omitted) Jacques Ellul, in a perceptive essay on the importance of Roman law, makes the point that, in addition to bequeathing the notion of the State, the concept of law and the range of judicial techniques, the Romans also provided the modern Western world with a number of legal institutions. These institutions, as others have noticed, are fundamental not just to legal thought and to legal technique, but also to the relationship between law and social reality. ‘Society handles the institutions of the law much in the same way as a child handles his bricks’, wrote Kahn-Freund in a celebrated passage in the introduction to an English translation of Renner, ‘It uses the same bricks all the time—or for a long time—today to build a manor house, tomorrow to build a factory, and the day after to build a railway station’ he continued. And he went on to make the point, a point which he described as ‘Renner’s positivist axiom’, that ‘the bricks remain the same’. What the lawyer does is to provide the bricks, but what society makes of these bricks ‘is none of the lawyer’s business’. § 1 Definitional problems Now it has to be emphasised at once that when it comes to defining a legal institution one is faced with ambiguity in that much will depend upon whether a wide or a narrow view is taken. If one takes a wide view, then the term ‘institution’ can embrace nearly all of the private law concepts of Roman law such as ownership, servitudes, contracts and marriage together with the courts and personnel of the law; however, if a narrow view is taken the term is restricted to a social reality around which rules form. With this narrower definition it is difficult to describe, say, a contract as a ‘social reality’ since it does not have the same basis in empirical reality as a person or a thing. On the other hand many legal concepts could attract the label ‘institution’ once a definition is framed around the idea of durability, communal organisation or social creation tending towards a common social end. All this may seem at first sight a rather sterile debate. Yet for the epistemologist keen to gain insights into case law a narrow view of a legal institution might well prove more useful for several reasons. First, because if one restricts institution to a social reality around which rules form this will provide a model capable of acting as a meeting point for the worlds of social fact, of legal analysis and of language in general; such a model has obvious attractions for anyone searching for an ontological starting point in legal science. Secondly, because a narrower definition of institution will allow the epistemologist to see the fundamental and enduring influence of Roman law on legal analysis and legal thought in general; this influence ought never to be underestimated by anyone interested in legal knowledge and legal habits of mind. Finally, because a narrower view of legal institution will allow the epistemologist to distinguish between legal institutions, institutional relations, legal concepts and legal categories; and such distinctions, in turn, will be useful when it comes to comprehending the kind of systems that are operating within the complexities of legal reasoning, legal method and legal education.
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Sourcebook on Obligations and Remedies § 2 Gains and the institutional system Starting out, then, from a narrow definition of legal institution it is possible to see that the notion has its foundation in Roman legal thought and, in particular, in the Institutiones of Gaius. ‘All law’, said Gaius, ‘relates either to persons (personae), to things (res) or to actions (actiones)’. Now the importance of this structure, which as many have observed has left its mark on all the modern codes, is that it went much further than just conveniently classifying all the rules of private law under three headings or into three books. Each element of the tripartite classification had a meaning at one and the same time in the world of fact and the world of law. Thus the sociologist can talk of persons, things and courts as existing in the world of social fact just as the jurist can talk of legal subjects (personae), legal objects (res) and legal remedies (actiones) as existing in the world of law. The three terms are descriptive as well as conceptual in that they can at one and the same time be attached to ‘real’ and ‘metaphysical’ entities. Actions, admittedly, are more ambiguous in this respect since the only way they can be envisaged as existing in social reality is in terms of court buildings and legal officials; but, in tying the nature of legal claims to the processes of court procedure, the Roman jurists had a means of keeping legal ‘rights’ (iura) and legal justice (suum cuique tribuere: giving to each what is due) tied to objective social realities with the result that fundamental legal relations such as ownership (dominium) and obligations were never in need of abstract definition in terms of axiomatic propositions. In other words Roman legal thought had little need of propositional mediating concepts since they had the means of creating iura simply through the manipulation of apparent social entities. Persons, things and actions are, therefore, institutions because they act as a structure capable of envisaging at one and the same time a system of legal and a system of social relations. Indeed they go further than this. In addition to acting as elements in a system of legal and social thought, the three institutions are equally capable of forming focal points in political and economic systems with the result that the moment one devises a system of juridical relations between the institutional elements one is in effect also creating a structure that has some meaning in the worlds of political, social and economic relations. Indeed, to the Marxist, legal institutions—persona and res in particular—are the basis of capitalism and economic power. ‘Legal institutions’, writes Kahn-Freund, ‘can and must be understood as the tools used by society in achieving this ultimate aim’ of ‘production’ and ‘reproduction’. This, of course, is one reason why (Roman) law has proved so central to Western social thought and Western rationality in general. ‘Legal analysis’, observes Renner, ‘is of necessity determined by history’, for it is history that has provided law with its ‘arsenal of concepts, its terminology’… § 4 Institution and system It would be idle to think that this Gaian structure alone acted as the epistemological foundation of Western legal thought. It is, to use the explanation of Teubner with respect to systems theory in general, more concerned with explaining broad structural patterns rather than with 28
The Structure of the Common Law providing an analysis of court decisions, statutes and the like. However, the institutional structure is, of itself, a central contribution to legal thought since it acts as the basis not only for subjects and objects around which rules are affixed (‘no person shall…’; ‘no vehicle heavier than five tons shall…’), but for the elements in a system of institutional relations. Between persona and res the Roman lawyers developed the fundamental relationships of ownership (dominium) and possession (possessio); between person and person they established the legal chain’ (vinculum iuris) of the obligatio; and between actio and persona they conceived the relationship of an interest. Each of these institutions and each of these relations acted, directly or indirectly, as a classification category for a whole mass of more detailed legal propositions and judicial opinions concerning slavery, guardianship, property, succession, loss and acquisition of ownership and possession, contracts, delicts and so on. But the point is that the details within these categories were only to a limited extent defined by the institutions and institutional relations themselves; and so, as we have seen, it is quite possible to have, as between two legal systems, contrasting rules with regard to, say, the passing of property in a supermarket without the structural relationship between personae and res being in any abstract way any different. Both systems could be said to be using a model of relations based on personae, res, obligatio and dominium. What Gaius had produced, therefore, was a genuine structural model since his scheme could transcend the details of Roman law to act as an organising model for bodies of rules thrown up by societies separated from Rome by space and by time. ‘Having set out these grand categories’, writes Villey, ‘it remains continually possible to modify the contents’. And so, for example, one can add new types of property to the institutional category of res as new economic situations create new forms of wealth; equally one can add to the institution of persona non human legal subjects such as corporate groups, animals (‘animal rights’) or, indeed, even an inanimate object such as a temple. The tripartite institutional plan is, then, as Jacques Ellul has observed, the basis for a juristic world quite separate from the world of social reality. The law’, he says, ‘becomes a kind of reality imposed upon the social situation, putting it into order, and ending up by becoming more ‘true’ than the facts’. Such an abstraction is of importance to epistemology in that it immediately suggests that institutions and institutional relations function as a system. Each institution as an element, and each institutional relation as a relation between elements, make sense within the Gaian scheme only by reference to the other elements and relations. However, the Gaian structure went further than this static model in that the interrelationships between the elements and relations endowed the model with a dynamic aspect; it could, so to speak, alter the very object it was attempting to describe. Legal relations could create institutions as much as institutions could create legal relations. A good example of this dynamic ability is to be found in the notion of persona. Legal persons are those persons recognised in the legal scheme as being able to sue and be sued as an individual entity; and while it has to be said at once that the Roman materials on legal personality are very fragmented, a study of the Corpus Iuris will at least indicate that ‘the personality attached by the law to human beings is no less its own creation than that of so called ‘legal’ persons, and the questions at issue are closely bound up with those
29
Sourcebook on Obligations and Remedies which concern the nature of subjective rights and the purposes for which they exist’. Two important consequences flow from the recognition that the legal subject is as much a creation of law as it is of social fact. First, if a legal person is an entity capable of bringing or defending a legal actio in its own right, then the moment that a person—or more importantly a group of persons (universitas)—is granted the procedural power to bring an action in his, her or its own name this will have the effect of turning that person or group into a legal person. In other words a legal persona can be created indirectly simply through rules attaching to the institution of the actio. This point was clearly recognised by the later classical jurists and seems even to have been appreciated by Gaius himself who is recorded as observing that, in the grand plan, towns are treated as private people. Secondly, if a legal person is capable as an entity of bringing and defending legal actions, then it follows that such an entity must also be capable of having its own patrimony—its own fund of tangible and intangible assets and liabilities treated as a single whole. For any entity that can bring an actio in personam for a debt or for damages and an actio in rem for vindicating property rights must, by the sheer logic of the Gaian scheme, be capable of owing and owning. The modern commercial corporation is, then, a direct result of the dynamic qualities of the Gaian structure. Alongside this legal personality development was an analogous development with regard to the institution of property (res). The starting point for the institution of a thing was the piece of tangible property which could be seen and touched (res corporales) and thus represented both a social fact and a legal object. However, as Gaius himself recognised, a res was quite capable of being conceived through the obligation relationship between persona and persona; the moment that one person owed to another person a sum of money or some other performance under a contract the debt or performance became a res in itself. One person could then lay claim to this res as if it was a form of property owned by the claimant. Accordingly, a debt was, and remains today, both a creature of the law of obligations and the law of property and this duality still causes a certain conceptual confusion. In Roman law itself, the conceptual confusion at the legal relation level was largely avoided at a practical level through the fundamental dichotomy in the law of actions between actions in rem and actions in personam; the form of property which a debt represented was not so much the sum of money as the entitlement to an actio in personam. The res, therefore, was the legal relation between persona and actio and not an actual right (ius) to the money itself. In English law, one finds a similar situation with regard to debts as property in that a debt is both a personal obligation and a form of property. However, despite the fact that the res is actually called a ‘chose in action’ in the common law, the lack of a distinction between real and personal actions in the area of movable property has meant that English lawyers have found it difficult to avoid conceptual confusion when talking about rights to a debt. Is one asserting a property right or merely an obligational right? This is a point to which we shall return. But for the moment what needs to be emphasised is that a debt is a form of economic wealth that has been created entirely out of the Gaian system itself. It has no independent existence as a social reality and as a result was an example of a piece of property which was intangible (res incorporates) and existing only because of the existence of the institutional system itself. As
30
The Structure of the Common Law Gaius himself put it: Incorporates sunt quae tangi non possunt, qualia sunt ea quae iure consistunt, sicut hereditas, usufructus, obligationes quoquo modo contractae…
Notes and questions 1
2
‘[L]egal rules must be grouped in organised sets which constitute the legal authority of a certain kind of social relation around a directing idea, around a common intellectual focal point. Legal institutions correspond accordingly to these organic and systematic rule sets which govern, according to a common object, a permanent and abstract manifestation of social life… Institutions are genuine legal bodies, Ihering having written: “‘…the rules find in this common object their point of reunion: they surround it like muscles surround bones…”’ (Bergel, Théorie générate du droit, 3rd edn, 1999, Dalloz, pp 178–79). Do the rules of contract attach to the contractual relationship or to the parties to the contract? English law is not based on Roman law. Does it nevertheless conform to the institutional system?
(b) Legal subject (persona) The starting point of the institutional system was, according to one Roman jurist, the person: for all law was constituted for the sake of man (cum igitur hominum causa omne ius constitutum: Dig 1.5.2). The Latin term persona has a long and complicated history. It started life as the mask in Greek and Roman theatre—where a single actor played more than one part, different masks representing different characters—to end up as a highly technical legal term representing the capacity of a legal subject to be the bearer of legal rights and duties (Duff, Personality in Roman Private Law, 1938, CUP, pp 1–26). In Roman law itself, persona was never, as such, the focal point of any general theory or specific definition (that was never the Roman way). But it was, nevertheless, an institutional focal point in as much as it assumed a specific role in the construction of certain rules and was a term to be contrasted with res (things). Thus, in relation to remedies (and note the interrelation of the institutional system), actions (actiones) were either in rem or in personam. Also, slaves were not persons, but things, while towns, and certain other groups, were not things, but persons (Dig 50.16.16). In addition, de personis was the basis for Book I of Gaius’ Institutes: the person was a focal point to which legal rules attached. Congenital Disabilities (Civil Liability) Act 1976 (c 28) 1
Civil liability to child born disabled (1)
If a child is born disabled as the result of such an occurrence before its birth as is mentioned in subsection (2) below, and a 31
Sourcebook on Obligations and Remedies person (other than the child’s own mother) is under this section answerable to the child in respect of the occurrence, the child’s disabilities are to be regarded as damage resulting from the wrongful act of that person and actionable accordingly at the suit of the child. (2)
An occurrence to which this section applies is one which (a) (b)
(3)
affected either parent of the child in his or her ability to have a normal, healthy child; or affected the mother during her pregnancy, or affected her or the child in the course of its birth, so that the child is born with disabilities which would not otherwise have been present.
Subject to the following subsections, a person (here referred to as ‘the defendant’) is answerable to the child if he was liable in tort to the parent or would, if sued in due time, have been so; and it is no answer that there could not have been such liability because the parent suffered no actionable injury, if there was breach of legal duty which, accompanied by injury, would have given rise to the liability…
Law Reform (Miscellaneous Provisions) Act 1934 (24 & 25 Geo V, c 41) 1
Effect of death on certain causes of action (1)
Subject to the provisions of this section, on the death of any person after the commencement of this Act all causes of action subsisting against or vested in him shall survive against, or, as the case may be, for the benefit of, his estate. Provided that this subsection shall not apply to causes of action for defamation…
Questions 1 2
3
4 5 6
An unborn child is not regarded as a legal persona. Why is this? If it were to be regarded as a legal subject, at what point would this be? Why was this section drafted in the way it was? Why could it not have been drafted ‘an unborn child, when its interests are in issue, shall be treated for purposes of civil liability as a legal subject’? Are there any situations in which children who have not yet been conceived should, nevertheless, be considered as legal subjects having interests in need of protection? Is the effect of the 1934 Act to keep alive the persona of the dead legal subject? Or is it the patrimony (res) that becomes the persona? Do the dead have rights? Do the unborn have rights? Do the unconceived have rights? Which of these have, if not rights, then interests? Read Airedale NHS Trust v Bland [1993] AC 789 in the law report. Was Tony Bland being treated as a persona or a res? Whose interests did the courts protect? 32
The Structure of the Common Law
Notes 1
2
The first point to be made about the institution of the persona is that it acted as the foundation of one of the great categories of law: the law of persons. In modern civil law, the law of persons can be divided into two broad areas: legal personality and status. The former is concerned with the nature and definition of the legal subject (for example, children in the womb, companies, associations), while the latter is ‘the condition of belonging to a class in society to which the law ascribes peculiar rights and duties, capacities and incapacities’ (the Ampthill Peerage case [1977] AC 547, p 577) (for example, children, citizens, aliens, etc). In truth, the law of persons is much more complex than this broad division suggests, in that it has come to embrace not just company law (and associated groups), nationality, aspects of mental health law and the like, but also family law, including the law relating to children. These subjects are often intimately tied up with the law of things (property and obligations) and law of actions (remedies)—indeed, persona and partrimonium are inextricably interlinked in a bipolar relationship. And thus, in some respects, the arbitrary allocation of a subject like company or family law to the law of persons can appear both conceptually and empirically artificial (cf CC, Art 1387). Nevertheless, there is a logic to the inclusion of family law within the law of persons, since marriage is more than a contract between two individuals; it is an institution capable of attracting its own rules and marriage itself is a form of status. Accordingly, viewed from the institutional scheme as preserved by the European codes, the law of persons remains a valuable category for orientating thinking towards the legal subject as starting point. If the human (homo) is the starting point for legal thought, it should by no means be assumed that all human beings, even in modern law, automatically have legal personality. Unborn children present particular problems, in that they have interests, but not personality (as the 1976 Act above indicates, and see Dig 1.5.7); and death of a human does not always extinguish the right to sue (as the 1934 Act illustrates). That said, birth and death act as the fundamental factual determinants for legal personality (Código civil, Arts 30, 32) and thus detailed rules are required to deal with problems such as disappearance and the presumption of death. New technology is presenting new problems (Airedale NHS Trust v Bland [1993] AC 789). The moment of death can also give rise to difficulties when it comes to succession (Re Rowland, p 166). Western legal systems once recognised civil death, but this has almost completely disappeared in modern liberal democracies. Tesco Supermarkets Ltd v Nattrass [1972] AC 153 House of Lords Lord Reid:… I must start by considering the nature of the personality which by a fiction the law attributes to a corporation. A living person has a mind 33
Sourcebook on Obligations and Remedies which can have knowledge or intention or be negligent and he has hands to carry out his intentions. A corporation has none of these: it must act through living persons, though not always one or the same person. Then the person who acts is not speaking or acting for the company. He is acting as the company and his mind which directs his acts is the mind of the company. There is no question of the company being vicariously liable. He is not acting as a servant, representative, agent or delegate. He is an embodiment of the company or, one could say, he hears and speaks through the persona of the company, within his appropriate sphere, and his mind is the mind of the company. If it is a guilty mind then that guilt is the guilt of the company. It must be a question of law whether, once the facts have been ascertained, a person in doing particular things is to be regarded as the company or merely as the company’s servant or agent. In that case any liability of the company can only be a statutory or vicarious liability… Reference is frequently made to the judgment of Denning LJ in HL Bolton (Engineering) Co Ltd v TJ Graham and Sons Ltd [1951] AC 850. He said: A company may in many ways be likened to a human body. It has a brain and nerve centre which controls what it does. It also has hands which hold the tools and act in accordance with directions from the centre. Some of the people in the company are mere servants and agents who are nothing more than hands to do the work and cannot be said to represent the mind or will. Others are directors and managers who represent the directing mind and will of the company, and control what it does. The state of mind of these managers is the state of mind of the company and is treated by the law as such. In that case the directors of the company only met once a year: they left the management of the business to others, and it was the intention of those managers which was imputed to the company. I think that was right. There have been attempts to apply Lord Denning’s words to all servants of a company whose work is brain work, or who exercise some managerial discretion under the direction of superior officers of the company. I do not think that Lord Denning intended to refer to them. He only referred to those who ‘represent the directing mind and will of the company, and control what it does’. I think that is right for this reason. Normally, the board of directors, the managing director and perhaps other superior officers of a company carry out the functions of management and speak and act as the company. Their subordinates do not. They carry out orders from above and it can make no difference that they are given some measure of discretion. But the board of directors may delegate some part of their functions of management giving to their delegate full discretion to act independently of instructions from them. I see no difficulty in holding that they have thereby put such a delegate in their place so that within the scope of the delegation he can act as the company. It may not always be easy to draw the line but there are cases in which the line must be drawn. Leonard’s case was one of them. In some cases, the phrase alter ego has been used. I think it is misleading. When dealing with a company the word alter is I think misleading. The
34
The Structure of the Common Law person who speaks and acts as the company is not alter. He is identified with the company. And when dealing with an individual no other individual can be his alter ego. The other individual can be a servant, agent, delegate or representative but I know of neither principle nor authority which warrants the confusion (in the literal or original sense) of two separate individuals… What good purpose could be served by making an employer criminally responsible for the misdeeds of some of his servants but not for those of others? It is sometimes argued—it was argued in the present case—that making an employer criminally responsible, even when he has done all that he could to prevent an offence, affords some additional protection to the public because this will induce him to do more. But if he has done all he can how can he do more? I think that what lies behind this argument is a suspicion that magistrates too readily accept evidence that an employer has done all he can to prevent offences. But, if magistrates were to accept as sufficient a paper scheme and perfunctory efforts to enforce it, they would not be doing their duty—that would not be ‘due diligence’ on the part of the employer. Then it is said that this would involve discrimination in favour of a large employer like the appellants against a small shopkeeper. But that is not so. Mr Clement was the ‘opposite number’ of the small shopkeeper and he was liable to prosecution in this case. The purpose of this Act must have been to penalise those at fault, not those who were in no way to blame. The Divisional Court decided this case on a theory of delegation. In that they were following some earlier authorities. But they gave far too wide a meaning to delegation. I have said that a board of directors can delegate part of their functions of management so as to make their delegate an embodiment of the company within the sphere of the delegation. But here the board never delegated any part of their functions. They set up a chain of command through regional and district supervisors, but they remained in control. The shop managers had to obey their general directions and also take orders from their superiors. The acts or omissions of shop managers were not acts of the company itself…
Questions 1
2 3
4 5
What if the customer in the supermarket had been injured by the carelessness of one of the employees: in what circumstances could the supermarket claim that the negligent act was not its act? What if the customer had been assaulted by a supermarket employee (a) while in the store or (b) while walking home? (Cf Keppel Bus Co, p 537.) Can a trade union own property and make contracts? Can it be sued? Can it sue? (Cf Trade Union and Labour Relations (Consolidation) Act 1992, ss 10, 12.) Do legal persons have all the rights that natural persons have? Can one sue a cricket club? (Cf Miller v Jackson, p 51.)
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6
7
8
9
Can an inanimate object ever have legal personality? Can an animal? (Cf Bumper Development Corporation v Metropolitan Police Commissioner [1991] 1 WLR 1362.) Do companies actually exist or are they simply a name? Do classes (for example, consumers) exist or do only individuals exist? Do groups and classes have interests and rights? (Cf Jolowicz, “Protection of diffuse, fragmented and collective interests in civil litigation: English law’ [1983] CLJ 222.) The first principle is that a company is an entity separate from its members but, not being a physical person is only capable of acting by its agents. The second principle is that a company, in its capacity as supplier of goods, like any other person in the capacity of taxpayer, landlord or in any other capacity, falls to be judged by its actions and not by its language. An employee who acts for the company within the scope of his employment is the company. Directors may give instructions, top management may exhort, middle management may question and workers may listen attentively. But if a worker makes a defective product or a lower manager accepts or rejects an order, he is the company’ (Lord Templeman in In re Supply of Ready Mixed Concrete (No 2) [1995] 1 AC 456, p 465). Can this statement be reconciled with the decision in Tesco v Nattrass? There is in fact no such thing as the company as such, no Ding an sich, only the applicable rules. To say that a company cannot do something means only that there is no one whose doing of that act would, under the applicable rules of attribution, count as an act of the company’ (Lord Hoffmann in MGFM Asia Ltd v Securities Commission [1995] 2 AC 500, p 507). Are the legal institutions of persona, res and actiones creations only of a rule system? Is the same true of the institution of the family?
Notes 1
Legal personality might arguably be seen as one of the most important contributions of Roman legal thought to the modern commercial world, although its actual modern development owes more to the later civilians than to the Roman jurists themselves. Nevertheless, the idea that groups could be endowed with a legal personality separate from the individual humans that made up the group was specifically recognised by the Roman jurists (Dig 3.4.7.1). Indeed, the Romans described towns as being like human persons in the legal plan (Dig 50.16.16). That said, the Romans never developed the commercial partnership into a legal person. This institution remained firmly entrenched in the law of contract (societas) and was to act as a formidable obstacle to the development of legal personality in the ius commune (the Roman ‘common law’ of continental Europe in the period before codification). In terms of theory, legal personality was originally based on the idea of a persona ficta 36
The Structure of the Common Law
2
(Post-Glossators), but in the 19th century, German theorists developed a realist approach whereby legal personality was founded on the notion that groups within society had a real existence. English law, which was slow at first to recognise legal personality, quickly developed the commercial company in the 19th century via legislation; and the courts still appear to favour the fiction theory (as Tesco indicates). Several characteristics are particularly important with respect to the development of legal personality: independent patrimony; ability to own and to contract; not affected by death of humans; limited liability. Given these characteristics, the legal person (that is, corporation) has proved capable of assuming considerable legal and social dominance in both the legal and the social world. Nevertheless, the kinds of corporate structures are not the same in all systems. Moreover, in the common law systems, the trust has assumed roles played by the legal person in civilian systems. Does the law of trusts take anything from the law of persons (universitas personarum) or is it exclusively a creation of the law of things (universitas rerum)? Jackson v Horizon Holidays Ltd [1975] 1WLR 1468 Court of Appeal (See p 220.)
Notes and questions 1
2
Mrs Thatcher is reported as saying that there ‘is no such thing as society’; there ‘are individual men and women and there are families’ (Woman’s Own, 31 October 1987). Whatever one’s political views, the statement is of importance, since it certainly reflects an ontological preoccupation of Western law. With the exception of legal personality (interestingly not alluded to by Mrs Thatcher), the law of persons has been largely preoccupied with individuals and families. The family, as such, has never been granted automatic legal personality—indeed it has not been properly defined in legal terms (Fitzpatrick v Sterling Housing Association Ltd [1998] Ch 304; Cass civ 17.12.1997, D.1998.111). But it was and remains indirectly of fundamental importance in Roman and modern law. Does the case of Jackson support Mrs Thatcher’s view of the world? In Roman law, the family was an institution attracting its own legal rules for reasons of power (patria potestas), status and relationship. However, it tended to be defined not actually as an institution but through the various relations out of which it was and remains constructed. Marriage and filiation are the main relationships. Marriage, therefore, was more than a mere contract between two people since it affected the status both of the parties themselves and of their children and grandchildren. Marriage is a common institution of Western law, thanks, partly, to the great influence and control of canon law from the 11th century. All the same, the 37
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3
relationship between the family and its property is one important focal point for comparison; common law and civil law differ in their approach to matrimonial regimes (cf the notion of dowry: Dig 24.3.1). The French model has a notion of community property (CC, Art 1400, etc) whereas English law sees only two individuals governed by the ordinary law of property (Van den Boogaard v Laumen [1997] 3 WLR 284, pp 292–93). That said, a spouse in UK law may have a real right in the family home, just as a wife did in late Roman law with respect to her dowry (C 8.18.12), and there are statutory rights of occupation (Matrimonial Homes Act 1983). In addition, the law of remedies and the general private law might provide indirect protection of the family (see, for example, Barclays Bank v O’Brien, p 256). Does Jackson indicate that the law of obligations does not recognise the family as a formal institution? What about the law of remedies? The status of individuals (in particular women and children) within the institution of the family is another focal point of comparison (cf Children Act 1989, s 1). What rights does the law of persons give children vis à vis parents and vice versa (cf CC, Arts 371, etc)? Khorasandjian v Bush [1993] QB 727 Court of Appeal (See p 141.)
Notes and questions 1
2
In French law, the law of persons itself endows individuals with certain rights, in particular privacy and dignity (CC, Arts 9, 16). These rights are separate from the law of obligations (cf CC, Art 1382). Would, then, Khorasandjian have been treated as an obligations case in France? English law, not having a code (and thus a formal institutional structure), has no separate rights of personality as such and must use the law of tort (cf torts of trespass, nuisance and defamation), remedies and (or) property (cf Ex p Island Records [1978] Ch 122). The law of persons can also decree that parts of the body are res extra commercium (CC, Art 16–1; cf Human Organ Transplants Act 1989, s 1). But can parts of the body be subject to the law of theft? (Cf R v Kelly [1999] 2 WLR 384.)
(c) Legal object (res) The second element in the institutional scheme after persona is res. This latter term can loosely be translated as ‘thing’—although the Latin word is rather amorphous—and represents another focal point around which legal propositions can be grouped. ‘Things’ (res) act to some extent as a counterpoint to ‘person’ (persona) and thus the law of things cannot be understood divorced from persons. Indeed, it has been said that, in the Code civil, persons are dealt 38
The Structure of the Common Law
with only from the angle of potential subjects of the law of property (Halpérin, Histoire du droit privé français depuis 1804, 1996, PUF, p 25). Equally, the law of things was, and arguably remains (in some systems at least), wedded to the law of actions. Moreover, the varying structural patterns of these interrelationships are the key to the different comparative models. In re Campbell (A Bankrupt) [1997] Ch 14 Chancery Division Knox J:… The point that arises is brought about by a singularly sad story of the events that had occurred. Mrs Campbell suffered very serious injuries as a result of a criminal assault some considerable time ago, long before the bankruptcy. She made an application to the Criminal Injuries Compensation Board for an award to be made to her. That was equally a very long time before she was made bankrupt. The indications are that the attack on her was in 1984 and her application to the Criminal Injuries Compensation Board was in 1985—the precise dates do not matter… The question which has been argued before me is whether the entitlement of Mrs Campbell to the award that ultimately was made in her favour in September 1992 was or represented something which was vested in the trustee in bankruptcy when she was made bankrupt. Of course, at that date, it was only a prospect of receiving an award from the Criminal Injuries Compensation Board and it is again common ground that, unlike the situation that obtains when a person has a right to sue for trespass for personal injuries (as no doubt Mrs Campbell had as against the criminal in question), when it is a Criminal Injuries Compensation Board award that is in issue there is no right either to sue for the award or, when the award is made, to recover the award. The latter does not really signify. What matters is that there is no right in a citizen who suffers injuries as a result of a criminal assault to enforce any form of award from the Criminal Injuries Compensation Board. The prospect of getting such an award has variously been described in argument as a hope and a spes (which is the Latin word for the same thing) but it is not, and this is again common ground, ‘a thing in action’ or, to speak law French for a second, ‘a chose in action’… The submission made by Mr McCulloch, for the trustee, is that although the prospect of recovering under an award by the Criminal Injuries Compensation Board is not a thing in action it was or represented something which did come within the definition of property and the way he put that claim, as I understood it, was to say that there was an interest vested in Mrs Campbell which was either future or contingent and arose out of or was incidental to property. The property which he identified as being the relevant asset was the money that was prospectively going to be paid if and when an award was made. Treating the matter purely as a matter of construction I am quite unable to accept that the word ‘property,’ when it is used in that definition of property, is intended to describe anything other than an existing item. In other words I do not accept that it is susceptible of referring to something which has no present existence but may possibly come into existence on some uncertain event in the future. There seems to me to be a very clear distinction between two situations. The 39
Sourcebook on Obligations and Remedies first is when there is a contingent interest in property, for example, the right to receive £50,000 under a legacy contingently on attaining the age of x years when one is x-y years old. That is an interest which is contingent and future but, if there is a trust fund—which I assume in my example there is—there is existing property in respect of which there is a contingent interest. That seems to me to be quite different from the second situation, the possibility of achieving an interest in something which presently does not exist but may exist in the future. Examples might perhaps be the owner of a lottery ticket in relation to the prize that may, perhaps, at the end of the following week arise in his or her possession. Similarly, the person who has filled in a coupon on the football pools might perhaps become entitled to property should that coupon have been successfully filled. In neither case there can it be described as a future or contingent interest arising out of or incidental to property because there is no underlying existing property which, or the proceeds of sale of which, are susceptible to the existence of a proprietary interest, even a future one. It seems to me that the trustee’s argument, purely as a matter of construction of the Act and the definition or enlargement of the concept of property which is contained in it, cannot succeed… Accordingly, I have come to the conclusion that the hope that Mrs Campbell had of being awarded an award, which in fact fructified two years later, was not at the date when she became bankrupt part of her property in such a way as to vest in the trustee in bankruptcy when she became bankrupt…
Notes 1
2
Res might be a difficult word to define or to translate, but within the institutional model it was a key institution in that it had meaning both in the empirical and in the legal worlds. As Gaius himself implied, tangible things (res corporales) are things that can be touched (quae tangi possunt)— land, a man, clothes, gold and the like (G 2.13); such things exist both in fact and in law. Physical property thus acts as a bridge between the real and the legal worlds. However, Gaius goes on to explain that res also encompasses intangible things (res incorporates) which exist only in law (quae iure consistunt) (G 2.14); here it is, in effect, the institutional system itself that is creating the res. A right to a debt is a res—a form of property— even although the legal asset consists only of an entitlement to a legal action (actio in personam). In English law, this idea of a debt as a res is to be found in private law (see, for example, Lipkin Gorman v Karpnale, p 782). Indeed, even a live performance by a musical group has been deemed property (Ex p Island Records [1978] Ch 122). One focal point for the comparatist is, then, the idea of property (res) itself: what can constitute a res in different systems? When will an ‘expectation’ become a res?
40
The Structure of the Common Law Beswick v Beswick [1966] Ch 538 Court of Appeal; [1968] AC 58 House of Lords (See pp 78, 249.)
Notes 1
2
3
4
Just as persona acted as the basis for a law of persons, so res acted as the foundation in the institutional scheme for a law of things. This category, in the Gaian scheme, must not be confused with the law of property’: for in the Institutes, the law of things consisted of ‘things’ in their widest sense and thus included obligations (G 2.14). Only by a careful study of the law of actions does one come to realise that the law of things is subdivided into two separate subcategories, the law of property and the law of obligations (see Jolowicz, Roman Foundations of Modern Law, 1957, OUP, pp 61–63). The substantive separation was appreciated by the Roman jurists (Dig 44.7.3 pr) and in the Institutes of Justinian, an obligation is given its famous definition of a vinculum iuris (J.3.13 pr). Is a contractual promise a form of property in English law? In the modern codes, these subcategories were to be elevated into generic categories, each category containing two fundamentally different kinds of right. Yet the distinction between real rights (in rem) and personal rights (in personam) was never made at the level of ‘rights’ (iura) in Gaius. In the Institutes, the distinction is made in the law of actions between an actio in rem and an actio in personam (G 4.1–5; and see below, p 382). It was the nature of the remedy which expressed the difference between property and obligations. One might note that in the Code civil, the law of obligations still forms part of the law of property in that obligations are classified alongside succession and gifts in Book III, entitled Des différentes manières dont on acquiert la propriete. In the Código civil, obligations are elevated into their own Book IV under the title of De las obligaciones y contractos. The BGB makes a fundamental distinction between property and obligations. Another way of viewing the law of things is exclusively in relation to the person. The mass of things, tangible and intangible, that each natural or legal person has can be viewed as a legal entity in itself, and this entity has attracted the name patrimony from the Roman law term patrimonium. The Romans themselves did not develop any kind of general theory with regard to patrimony, but they certainly established some of its foundational ideas which were to be built upon by the later civilians (see Ourliac and de Malafosse, Histoire du droit privé: 2 Les biens, 2nd edn, 1971, PUF, pp 60– 68). In particular, they developed the idea of a mass of individual tangible and intangible things as an entity in itself (Dig 50.16.208) capable of being protected by its own legal remedy. This notion of a universitas rerum is of particular importance to the 41
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comparatist for a number of reasons: (a) the patrimony is particularly well developed in French law as a key institutional structure; (b) the idea of a universitas rerum can be found to underpin the Anglo-American trust; (c) the New Dutch Code has specifically incorporated the notion of patrimony as part of its system: Book III is concerned only with patrimonial rights and thus one finds in a single book all things, both corporeal and incorporeal; (d) the idea of a universitas rerum is fundamental to succession law. Waverley Borough Council v Fletcher [1996] QB 334 Court of Appeal Auld LJ: This appeal concerns the collision of two familiar notions of English law: ‘finders keepers’ and that an owner or lawful possessor of land owns all that is in or attached to it. More particularly, it raises two questions. (1) Who, as between an owner or lawful possessor of land and a finder of an article in or attached to the land, is entitled to the article? (2) How is the answer to (1) affected by, or applied, when the land is public open space? The appellant, Waverley Borough Council, is the freeholder of a park, Farnham Park, in Farnham, Surrey, to which it gave free access to the public for pleasure and recreational uses. It exercised control over the park by means of a ranger and his staff and by bylaws. On 28 August 1992, the respondent, Ian Fletcher, took a metal detector into the park to search for metal objects which might be of interest or value. He found, by use of the detector and some determined digging in hard ground, a mediaeval gold brooch about nine inches below the surface. He reported his find, and a coroner’s inquisition was held to determine whether it was treasure trove. The jury found that it was not, and the coroner returned the brooch to Mr Fletcher. The council then issued proceedings against Mr Fletcher, claiming a declaration that the brooch was its property and delivery up of it or damages. Mr Fletcher, by his defence, relied on the argument of ‘finders keepers’. He maintained that the council’s claim to ownership of the brooch required it to prove not only ownership, but also occupation, of the park. He admitted that it owned the park, but asserted that it did not occupy it because it was bound to allow the public to use it for pleasure and recreation. He said that he found the brooch whilst he was a lawful visitor there, and that, therefore, because the true owner of it had not been found, he was entitled, as finder, to keep it. The judge, Judge Fawcus, sitting as a judge of the High Court, found for Mr Fletcher. After reviewing the authorities, he held that the rule that an owner of land owns everything in his land applies only to things that are naturally there, not to lost or abandoned objects; that the crucial factor is the control that he intends and is able to exercise over lawful visitors in relation to any objects that might be on or in the land; that Mr Fletcher was a lawful visitor and did not become a trespasser by digging and removing the brooch; but that it was not necessary to decide the question of control because the council had not established ‘a paramount claim so as to displace the maxim “finders keepers’”. Mr Munby [counsel for the defendant]…argued that it is against common sense that it should make all the difference whether an object is just under or on the surface. That was also the view of the judge. He said that he could see 42
The Structure of the Common Law no reason in common sense why the better possessory claim should depend upon whether an object was found on or in ground. Mr Munby gave as one of a number of examples in support of his argument, a lost watch on a muddy path which might within a day or two become covered by a thin coating of mud. Why, he asked, should the landowner’s claim be different and stronger when the watch finally, but only just, disappears from sight? In my view, the authorities reveal a number of sound and practical reasons for the distinction. First, as Donaldson LJ said in Parker v British Airways Board [1982] QB 1004, p 1010, an object in land Is to be treated as an integral part of the realty as against all but the true owner’ or that the finder in detaching the object would, in the absence of licence to do so, become a trespasser. Mr Munby suggested that this is wrong because if an object is treated as part of the realty the true owner cannot have priority. However, the English law of ownership and possession, unlike that of Roman law, is not a system of identifying absolute entitlement but of priority of entitlement, and Donaldson LJ’s rationale is consistent with that: see Buckland and McNair, Roman Law and Common Law, 2nd edn, revised 1965, p 67… Second, removal of an object in or attached to land would normally involve interference with the land and may damage it: cf AL Goodhart’s view in his article in (1944) CLJ 195, p 207, that this distinction is not of sufficient importance in principle to warrant separate rules as to possession. Third, putting aside the borderline case of a recently lost article which has worked its way just under the surface, in the case of an object in the ground its original owner is unlikely in most cases to be there to claim it. The law, therefore, looks for a substitute owner, the owner or possessor of the land in which it is lodged. Whereas in the case of an unattached object on the surface, it is likely in most cases to have been recently lost, and the true owner may well claim it. In the meantime, there is no compelling reason why it should pass into the possession of the landowner as against a finder unless he, the landowner, has manifested an intention to possess it. As to borderline cases of the sort mentioned by Mr Munby, potential absurdities can always be found at the margins in the application of any sound principle. It is for the trial judge to determine as a matter of fact and degree on which side of the line, on or in the land, an object is found. The distinction is now long and well established. In addition to the judicial and academic authority to which I have referred, it is to be found in Annex 1 to the Eighteenth Report (Conversion and Detinue) of the Law Reform Committee (1971) (Cmnd 4774); the Law Commission’s paper Treasure Trove—Law Reform Issues 1987, para 9; Megarry and Wade, The Law of Real Property, 5th edn, 1984, p 61; and Halsbury’s Laws of England, 4th edn, reissued 1991, Vol 2, p 840, para 1814 and 4th edn, 1981, Vol 35, p 623, para 1120. In my view, the two main principles established by the authorities, and for good practical reasons, are as stated by Donaldson LJ in Parker v British Airways Board [1982] QB 1004. I venture to restate them with particular reference to objects found on or in land, for he was concerned primarily with an object found in a building. (1) Where an article is found in or attached to land, as between the owner or lawful possessor of the land and the finder of the article, the owner or lawful possessor of the land has the better title. (2) Where 43
Sourcebook on Obligations and Remedies an article is found unattached on land, as between the two, the owner or lawful possessor of the land has a better title only if he exercised such manifest control over the land as to indicate an intention to control the land and anything that might be found on it… Members of the public have access to the park at all times, save for part of it given over to a golf course and the ranger’s house and garden. The council employed a ranger who, with other part time voluntary rangers, regularly patrolled and managed the maintenance of the park and supervised the use of it by the public. The council’s declared policy was not to permit the use of metal detectors in the park. But, though it had made approved bylaws forbidding certain activities, it had not been able to persuade the Home Office to approve a bylaw prohibiting the use of metal detectors. There had been notices prohibiting the use of metal detectors in the park, but they had been pulled down, and there was none at the material time. Despite the absence of such notices, the ranger had on two or three occasions stopped people using them. Mr Fletcher was unaware of the council’s policy and had regularly used his metal detector there. The judge held, on those facts: first, that metal detecting was ‘recreation’ which the council was obliged to permit under the terms on which it held the land; second, that ‘digging in response to the metal detector’s signal, provided it is within reasonable bounds, is incidental to such recreational activity’; third, that the council had not made plain to Mr Fletcher its policy to prohibit metal detecting; and, fourth, that, in any event, in the absence of any applicable bylaws, the council had no authority to stop him. In my view, the judge’s reasoning that metal detecting was a recreation within the terms under which the council held the land and that, therefore, it included a right to excavate and carry away objects found, is strained. Whilst some sports or recreations, such as golf or cricket, may involve some disturbance of the soil, metal detecting is not, in my view, ‘of a like nature’ to the ‘sports pastimes or recreations’ mentioned in the second of the covenants to which I have referred. Moreover, the very fact that the activity is inherently invasive is against it being recreational in this context. Even if I am wrong about that, it cannot entitle members of the public to excavate the soil, whether ‘within reasonable bounds’ or not… Accordingly, in my view, neither Mr Fletcher’s metal detecting nor his digging nor his removal of the brooch was within any of the purposes for which the council was permitted to, or did, allow the public use of the park… Mr Munby submitted in reliance on Hall’s case [Hall v Beckenham Corporation [1949] 1 KB 716] that the council did not occupy the park; and that it had no right qua owner to regulate its use by a member of the public, who could do what he liked there unless he breached a bylaw or the general criminal law. In my view, the council, whether as owner, possessor or occupier of the park, was a trustee for the general public in the exercise of its powers and duties of management and control under the Act of 1906 and the terms under which it held the land. As such it had a superior right to the brooch over that of Mr Fletcher who, in the absence of a licence from the council, had no entitlement to dig and remove it. In my view, the council was not restricted in its enforcement of that right to the mechanisms of prosecution under bylaws or 44
The Structure of the Common Law the general criminal law. The purpose of a bylaw is simply to provide a local authority with a convenient criminal sanction in the enforcement of its public powers and duties. The absence of a bylaw on any matter does not mean that the council has no corresponding civil right, in this instance in its management and control of its land… Accordingly, I can see no basis for not applying the general rule that an owner or lawful possessor of land has a better title to an object found in or attached to his land than the finder, or for modifying it in some way to produce a different result in the circumstances of this case. Mr Fletcher did not derive a superior right to the brooch simply because he was entitled as a member of public to engage in recreational pursuits in the park. Metal detecting was not a recreation of the sort permitted under the terms under which the council held the land on behalf of the general public. In any event, digging and removal of property in the land were not such a permitted use, and were acts of trespass. And the council was entitled to exercise its civil remedy for protection of its property regardless of the absence of any applicable bylaw. As to the judge’s third point, the absence of a manifest intention to control, it is, for the reasons I have given in the earlier part of this judgment, not the test for objects found in or attached to land; and, for the reasons I have just given, there is no reason for its application to the circumstances of this case. If there were, given the council’s statutory powers and duties, the terms under which it holds and controls and manages the park and the way in which it exercises that control and management, I would regard it as clearly having the requisite intent and ability to control. For those reasons, I would allow the appeal. Ward LJ: I agree. Sir Thomas Bingham LJ: I have had the benefit of reading in draft the judgment of Auld LJ I am in complete agreement with it, and would allow this appeal for the reasons which he gives.
Notes and questions 1
Ownership has been described as ‘one of the most characteristic institutions of human society’ (Honoré, ‘Ownership’, in Guest (ed), Oxford Essays in Jurisprudence, 1961, OUP, p 107). Some may dispute this, but there is no doubt that the notions of dominium and proprietas (they were synonymous in Classical Roman law: Dig 41.1.13) is one of the great contributions of Roman law to Western culture and mentality. As usual, the actual Roman notion of ownership (dominium) is more elusive than would appear from all the later civilian interpretations and its modern definition based on usus, fructus and abusus owes more to the work of the medieval jurists than to the Romans themselves. But the main characteristics of dominium are to be found scattered around the Roman sources (see, for example, Dig 5.3.25.11) and the idea of an exclusive and individual power relation
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2
3
4
between persona and res is inherent not just in the word itself, but also in the texts. This exclusivity and power was to become a key idea in Revolutionary France, dedicated to overthrowing feudal property ideas, and thus ownership is defined in the Code civil as the ‘right to enjoy and to dispose of things in the most absolute manner’ (droit de jourir et disposer des choses de la manière la plus absolue) (Art 544). Nevertheless, the exclusivity must never be overemphasised as a matter of history. For neither the Romans nor the French post-Revolutionaries ever accepted such an idea in everyday practice; dominium was always more of a bridge between the legal and the ideological worlds than between the worlds of law and social fact. When one turns to the Waverley case interesting questions arise. Ought ownership (a property concept) to be determined by the status (law of persons) of the finder (that is, status of ‘trespasser’)? Did the council succeed because it was deemed the possessor of the brooch or because it was held to have a better right to possession? What if Mr Fletcher had some months previously lost a ring in the park and had repeatedly returned with a metal detector to search for it until he found it: could the council claim the ring if it had been recovered several inches below the surface? A homeless person in breach of the park bylaws enters the park each night to sleep on a park bench and one night finds a £10 note which he hands in to the local police the next day. If the note is never claimed, who will be entitled to it? In addition to dominium (a legal relationship) the Romans also developed the relationship of possession: the factual relationship between person and thing (Dig 41.2.3). Physical (corpus) and mental (animus) control were vital (Dig 41.2.3.1; 41.2.17.1); and what, practically speaking, distinguished ownership from possession were two quite different sets of remedies. Ownership was protected by the actio in rem, whereas possession was protected by the public law remedy of the interdict. In civil law, possession and ownership were quite different notions (nihil commune habet proprietas cum possessione: Dig 41.2.12.1), but is this true of the common law? Waverley involved a chattel. But what if the dispute involved land? What if a building contractor, who does not have actual possession of the land on which he is erecting a building, is prevented from working by trespassing squatters? Must the contractor, in order to get a repossession order from the courts, show that he had possession of the land or will a ‘sufficient interest’ be enough? (Cf Manchester Airport plc v Dutton [1999] 3 WLR 524.)
46
The Structure of the Common Law Housing Act 1985 (c 68) (as amended)
118 The right to acquire (1)
A tenant of a registered social landlord who satisfies the conditions in section 16(1)(a) and (b) of the Housing Act 1996 has the right to acquire, that is to say, the right, in the circumstances and subject to the conditions and exceptions stated in the following provisions of this Part(a) (b)
if the dwelling house is a house and the landlord owns the freehold, to acquire the freehold of the dwelling house; if the landlord does not own the freehold or if the dwelling house is a flat (whether or not the landlord owns the freehold), to be granted a lease of the dwelling house.
Notes and questions 1
2
The development of the notion of a right is discussed in a later chapter (see pp 126–29). Briefly, the Roman notion of dominium (proprietas) was based upon the relationship between person and physical thing and thus identified ownership with the thing itself (Patault, Introduction historique au droit des biens, 1989, PUF, p 17; cf CC, Art 644). However two important developments in Roman law laid the foundations for further evolution: the extension of things to include intangible property (res incorporates) and the extension of the actio in rem, the remedy which protected ownership, to include certain rights in another’s property (for example, usufruct) (cf CC, Art 581). Here were the foundations for an abstract institutional structure capable of expressing property rights independently of physical things themselves (Patault, pp 109–11). The next step was to see the ‘right’ as an object in itself. Indeed, once dominium had been merged with the Roman concept of ius (meaning substantive legal relationship or connection) a model was emerging by which all legal relationships, including obligations and ownership (ius in re), could be envisaged in terms of (property) ‘rights’ (Patault, pp 108–09). One thus arrives at the situation in the 1985 Act whereby the secure tenant, who already has a property right in the house or flat, now has a further ‘right’. Is this a ‘right’ to a ‘right’? In other words, what actually is the object of the ‘right to acquire’? Is it the property itself, the freehold or lease or some other res incorporates? If one does have a ‘right to buy’, is this a form of property which, in principle, could be bought and sold? Frost v Aylesbury Dairy Co Ltd [1905] 1 KB 608 Court of Appeal Collins MR: This is an appeal by the defendants in an action in which the plaintiff sued to recover expenses to which he was put by the illness and death of his wife, caused, as he alleged, by typhoid fever of which the infection was caught from milk supplied by the defendants. The jury found that the milk was the cause of the fever, and gave a verdict for the plaintiff, for whom
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Sourcebook on Obligations and Remedies judgment was entered. The first point taken is whether in point of law, on the facts as ascertained, there can be any liability on the defendants even if it is admitted that the milk was the cause of the fever, and on this it is contended for the defendants that there was no actionable wrong on their part. The point is whether the circumstances under which the milk was bought bring the case within the provisions of s 14, sub-s 1 [see, now, s 14(3) of the 1979 Act] of the Sale of Goods Act 1893… Considering the matter by steps, it appears that there was no specific evidence as to the inception of the relation of buyer and seller, because, as a matter of fact, people do not, when they want a milk supply, enter into an elaborate negotiation with the vendor of the milk. We begin the discussion with the practice followed in the dealing between two parties. The fact of the supply of the article involves a contract. That contract is for the supply of food, for no one would question that the milk was bought as an article of consumption… [M]ilk was supplied for a purpose known to the sellers under circumstances which showed that the buyer relied on the sellers’ skill or knowledge, and that the goods were of a description which it was in the course of the sellers’ business to supply. The point mainly pressed upon us on behalf of the defendants was that the buyer could not be said to rely on the skill or judgment of the sellers in a case in which no amount of skill or judgment would enable them to find out the defect in the milk supplied. That amounts to a contention that a seller of goods cannot be answerable for a latent defect in them unless upon a special contract to that effect. That argument is not employed for the first time, for it was used before the Sale of Goods Act 1893, which consolidated and crystallised the law, which seems to me to be just the same under the statute as it was under the common law. The matter was specifically dealt with in the considered judgment of the Court of Appeal in Randall v Newson, where it was held that on the sale of an article for a specific purpose there is a warranty by the vendor that it is reasonably fit for the purpose, and that there is no exception as to latent undiscoverable defects. That was the case of a defective pole for a carriage, and the view of the court is expressed thus: If the subject matter be an article or commodity to be used for a particular purpose, the thing offered or delivered must answer that description, that is to say, it must be that article or commodity, and reasonably fit for the particular purpose. The governing principle, therefore, is that the thing offered and delivered under a contract of purchase and sale must answer the description of it which is contained in words in the contract, or which would be so contained if the contract were accurately drawn out. And if that be the governing principle, there is no place in it for the suggested limitation.’ The suggested limitation was that the principle applied only to such defects as could be discovered by reasonable care and skill. The judgment continues: If the article or commodity offered or delivered does not in fact answer the description of it in the contract, it does not do so more or less because the defect in it is patent, or latent, or discoverable. That appears to me to be a conclusive authority on that part of the case raised on behalf of the defendants. I may, however, refer also to a matter that was dealt with in the judgment of this court in Preist v Last, that a good deal of difficulty and some confusion may arise as to whether an article is sold for a particular purpose where it is capable of being used for a number of purposes. Where the thing dealt with carries in its description a limitation to a particular 48
The Structure of the Common Law purpose the difficulty does not arise. In this case, we begin with the purchase of milk, a commodity which carries with it a special limitation to the purpose of food. It is obvious that the obligation of the seller of food must stand in a different position from that of the seller of an article that may or may not, according to the special circumstances of the case, be used for a particular object. All the difficulty is gone when once we get in the description of the article itself the purpose for which it is to be used. That principle was applied in the case to which I have referred, which was that of the purchase of a hot water bottle, a description which carries with it the purpose for which the article is bought. The same principle applies in this case, where it is clear that the milk was bought for a special purpose, and sold by persons who claimed and received the confidence of the purchaser in the special skill and knowledge asserted by the sellers. It seems to me to be clear that there is no legal difficulty in upholding this verdict, and that the appeal should be dismissed. [Mathew and Cozens-Hardy LJJ were of the same opinion.]
Notes and questions 1
2
The sellers of the milk were strictly liable in this case because the rules regarding merchantable [now satisfactory] quality and reasonable fitness in the Sale of Goods Act focus, not on the seller, but on the object of the sale (res). Either the milk was fit, or it was not. Had the rule been drafted differently—for example, had it been drafted around the institution of the seller, rather than the thing sold—the duty may well have turned out to have been different. Compare s 14 of the Sale of Goods Act 1979 with s 13 of the Supply of Goods and Services Act 1982. What if a manufacturer of a product puts a defective product onto the market: do (a) the common law and (b) statute focus upon the person or the thing? (Cf Donoghue v Stevenson, p 65; Consumer Protection Act 1987, s 2, p 682.) Sale of goods contracts always involve persons (legal subjects) and things (legal objects) and thus a statute like the Sale of Goods Act is relevant not only to the law of obligations but also to the law of property. In Roman law, and in modern German law, the obligation and property aspects of a sale of goods transaction were always kept quite separate, but this is not true of English law, which uses the contract itself as a means of passing ‘property’ in goods (Sale of Goods Act 1979, ss 16–18). What if the contract turns out to be defective: does this put the property title at risk? Or what if the seller goes bankrupt, or the goods are destroyed, before they have been delivered to the buyer: what kind of claim does the buyer have? Can the buyer bring an action in rem against the thing? CTN Cash and Carry Ltd v Gallaher Ltd [1994] 4 All ER 714 Court of Appeal (See also p 504.) Steyn LJ:… On 20 November 1986, the manager of the plaintiffs’ warehouse in Preston placed an order for a large consignment of cigarettes. The invoice 49
Sourcebook on Obligations and Remedies value of the order inclusive of VAT was of the order of £17,000. By mistake an employee of the defendants put the address of the plaintiffs’ warehouse in Burnley on the delivery note. On 24 November 1986 the defendants’ driver delivered the goods to the plaintiffs’ warehouse in Burnley. The goods were unloaded. Mr Nuttall, an assistant branch manager of the plaintiffs, signed the delivery note. Shortly afterwards, Mr Nuttall discovered that the delivery was intended for the Preston warehouse and not the Burnley warehouse. He telephoned the defendants’ dispatch department about the matter. Eventually it was agreed that the defendants would arrange for the carriage of the goods from Burnley to Preston. The defendants were to undertake the carriage of the goods to Preston on 28 November 1986. Unfortunately, there was a robbery at the Burnley warehouse on the day before. The entire consignment of cigarettes was stolen... The question was, who should suffer the loss resulting from the theft of the goods at the Burnley warehouse?...
Questions 1 2 3
What is your answer to Steyn LJ’s question? Are ss 16-20 of the Sale of Goods Act 1979 of any help? Were the plaintiffs possessors of the cigarettes before they were stolen? What if the cigarettes had been defective and not reasonably fit for their purpose? In re Goldcorp Exchange Ltd [1995] 1 AC 74 Privy Council (See p 246.)
Questions 1 2 3
Is the result of this case dependent upon the existence or non-existence of an image of a relationship between person and thing? Was there ever a thing to which the plaintiffs were entitled? If these facts arose again today, would the result be the same? (Cf Sale of Goods Act 1979, ss 20A-B.)
(d) Legal remedy (actio) The third institution of Gaius and Justinian is the actio. An action, says Justinian, is nothing but the right (ius) to go to court to seek what is due to one (J 4.6 pr; Dig 44.7.51)—ubi ius ibi remedium (where there is a right, there is a remedy), as later lawyers put it. But this was not always the role of actions. In Gaius’ time it might have been more accurate to say: ubi remedium ibi ius (where there is a remedy, there is a right), for the question of what was due to one was determined less by any idea of a pre-existing ius and much more by the existence or non-existence of a legal remedy. A similar observation could be
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made of the common law before the procedural reforms of the 19th century. Yet how relevant is the remedy—the actio—to modern law? Is it simply a procedural institution confined these days to giving expression to pre-existing rights, or does it still have a more active role? English law presents a somewhat complex picture. Supreme Court Act 1981 (c 54) 37
Powers of High Court with respect to injunctions and receivers (1) The High Court may by order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to the court to be just and convenient to do so.
The Unfair Terms in Consumer Contracts Regulations 1999 SI 1999/2083 12
Injunctions to prevent continued use of unfair terms (1) The Director or, subject to paragraph (2), any qualifying body may apply for an injunction (including an interim injunction) against any person appearing to the Director or that body to be using, or recommending use of, an unfair term drawn up for general use in contracts concluded with consumers. (2) A qualifying body may apply for an injunction only where (a) it has notified the Director of its intention to apply at least fourteen days before the date on which the application is made, beginning with the date on which the notification was given; or (b) the Director consents to the application being made within a shorter period. (3) The court on an application under this regulation may grant an injunction on such terms as it thinks fit. (4) An injunction may relate not only to use of a particular contract term drawn up for general use but to any similar term, or a term having like effect, used or recommended for use by any person.
Kingdom of Spain v Christie, Manson and Woods Ltd [1986] 1 WLR 1120 Chancery Division (See p 209.) Miller v Jackson [1977] QB 966 Court of Appeal Lord Denning MR: In summer time village cricket is the delight of everyone. Nearly every village has its own cricket field where the young men play and the old men watch. In the village of Lintz in County Durham they have their own ground, where they have played these last 70 years… Yet now after these 70 years a judge of the High Court has ordered that they must not play there any more. He has issued an injunction to stop them. He has done it at the instance of a newcomer who is no lover of cricket. This newcomer has built, or has had built for him, a house on the edge of the cricket ground which four years ago was a field where cattle grazed. The animals did not mind the cricket.
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Sourcebook on Obligations and Remedies But now this adjoining field has been turned into a housing estate… Now he complains that, when a batsman hits a six, the ball has been known to land in his garden or on or near his house. His wife has got so upset about it that they always go out at weekends. They do not go into the garden when cricket is being played… No one has been hurt at all by any of these balls, either before or after the high fence was erected. There has, however, been some damage to property, even since the high fence was erected. The cricket club have offered to remedy all the damage and pay all expenses… But Mrs Miller and her husband have remained unmoved. Every offer by the club has been rejected. They demand the closing down of the cricket club. Nothing else will satisfy them. They have obtained legal aid to sue the cricket club. In support of the case, the plaintiff relies on the dictum of Lord Reid in Bolton v Stone [1951] AC 850, p 867: ‘…if cricket cannot be played on a ground without creating a substantial risk, then it should not be played there at all.’ I would agree with that saying if the houses or road were there first, and the cricket ground came there second… But I do not agree with Lord Reid’s dictum when the cricket ground has been there for 70 years and the houses are newly built at the very edge of it. I recognise that the cricket club are under a duty to use all reasonable care consistently with the playing of the game of cricket, but I do not think the cricket club can be expected to give up the game of cricket altogether. After all they have their rights in their cricket ground. They have spent money, labour and love in the making of it; and they have the right to play on it as they have done for 70 years… If we were to approach this case with the eyes of the judges of the 19th century they would, I believe, have seen it in this way. Every time that a batsman hit a ball over the fence so that it landed in the garden, he would be guilty of a trespass… So would the committee of the cricket club, because they would have impliedly authorised it. They cheered the batsman on. If one or two of the players went round and asked the householder if they could go into the garden to find it, the householder could deny them access… Of course, if the householder picked up the ball himself and gave it to his son to play with, he would be liable in conversion… Even if there was any doubt about the plaintiffs right to sue in trespass, he would have a claim in nuisance, once he proved that the balls were repeatedly coming over or under the fence and making things uncomfortable for him. To those claims, in the 19th century, either in trespass or in nuisance, the committee of the cricket club would have no answer… It would be no good for them to say that the cricket ground was there before the house was built. The householder could rely on… Sturges v Bridgman (1879) 11 Ch D 852… The case here was not pleaded by either side in the formulae of the 19th century. The plaintiffs did not allege trespass… The case was pleaded in negligence or alternatively nuisance… The tort of nuisance in many cases overlaps the tort of negligence… But there is at any rate one important distinction between them. It lies in the nature of the remedy sought. Is it damages? Or an injunction? If the plaintiff seeks a remedy in damages for injury done to him or his property, he can lay his claim either in negligence or in nuisance. But, if he seeks an injunction to stop the playing of
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The Structure of the Common Law cricket altogether, I think he must make his claim in nuisance. The books are full of cases where an injunction has been granted to restrain the continuance of a nuisance. But there is no case, so far as I know, where it has been granted so as to stop a man being negligent. At any rate in a case of this kind, where an occupier of a house or land seeks to restrain his neighbour from doing something on his own land, the only appropriate cause of action, on which to base the remedy of an injunction, is nuisance... He must have been guilty of the fault, not necessarily of negligence, but of the unreasonable use of land... I would, therefore, adopt this test: is the use by the cricket club of this ground for playing cricket a reasonable use of it? To my mind it is a most reasonable use... On taking the balance, I would give priority to the right of the cricket club to continue playing cricket on the ground, as they have done for the last 70 years. It takes precedence over the right of the newcomer to sit in his garden undisturbed. After all he bought the house four years ago in mid summer when the cricket season was at its height. He might have guessed that there was a risk that a hit for six might possibly land on his property. If he finds that he does not like it, he ought, when cricket is played, to sit in the other side of the house or in the front garden, or go out; or take advantage of the offers the club have made to him of fitting unbreakable glass, and so forth. Or, if he does not like that, he ought to sell his house and move elsewhere. I expect there are many who would gladly buy it in order to be near the cricket field and open space. At any rate he ought not to be allowed to stop cricket being played on this ground. This case is new. It should be approached on principles applicable to modern conditions. There is a contest here between the interest of the public at large and the interest of a private individual. The public interest lies in protecting the environment by preserving our playing fields in the face of mounting development, and by enabling our youth to enjoy all the benefits of outdoor games, such as cricket and football. The private interest lies in securing the privacy of his home and garden without intrusion or interference by anyone. In deciding between these two conflicting interests, it must be remembered that it is not a question of damages. If by a million to one chance a cricket ball does go out of the ground and cause damage, the cricket club will pay. There is no difficulty on that score. No, it is a question of an injunction. And in our law you will find it repeatedly affirmed that an injunction is a discretionary remedy. In a new situation like this, we have to think afresh as to how discretion should be exercised... As between their conflicting interests, I am of opinion that the public interest should prevail over the private interest... In my opinion, the right exercise of discretion is to refuse an injunction; and, of course, to refuse damages in lieu of an injunction. Likewise as to the claim for past damages. The club were entitled to use this ground for cricket in the accustomed way. It was not a nuisance, nor was it negligence... So, if the club had put it to the test, I would have dismissed the claim for damages also. But as the club very fairly say that they are willing to pay for any damage, I am content that there should be an award of £400 to cover any past or future damage. I would allow the appeal, accordingly.
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Sourcebook on Obligations and Remedies Geoffrey Lane LJ:… No one has yet suffered any personal injury, although Mrs Craig at least was perhaps lucky to have avoided it. There is no doubt that damage to tiles or windows at the plaintiffs’ house is inevitable if cricket goes on. There is little doubt that if the plaintiffs were to stay in their garden whilst matches are in progress they would be in real danger of being hit… There is no obligation on the plaintiffs to protect themselves in their own home from the activities of the defendants. Even if there were such an obligation it would be unreasonable to expect them to live behind shutters during the summer weekends and to stay out of their garden… It is true that the risk must be balanced against the measures which are necessary to eliminate it and against what the defendants can do to prevent accidents from happening… In the present case, so far from being one incident of an unprecedented nature about which complaint is being made, this is a series of incidents, or perhaps a continuing failure to prevent incidents from happening, coupled with the certainty that they are going to happen again. The risk of injury to persons and property is so great that on each occasion when a ball comes over the fence and causes damage to the plaintiffs, the defendants are guilty of negligence… Was there here a use by the defendants of their land involving an unreasonable interference with the plaintiffs’ enjoyment of their land? …A balance has to be maintained between on the one hand the rights of the individual to enjoy his house and garden without the threat of damage and on the other hand the rights of the public in general or a neighbour to engage in lawful pastimes. Difficult questions may sometimes arise when the defendants’ activities are offensive to the senses, for example, by way of noise. Where, as here, the damage or potential damage is physical the answer is more simple. There is… no excuse I can see which exonerates the defendants from liability in nuisance… There is here a real risk of serious injury… I would accordingly uphold the grant of the injunction to restrain the defendants from committing nuisance. However, I would postpone the operation of the injunction for 12 months to enable the defendants to look elsewhere for an alternative pitch… I have not thought it necessary to embark on any discussion of the possible rights of the defendants arising from matters which were neither pleaded nor argued. Cumming-Bruce LJ: I agree with all that Geoffrey Lane LJ has said in his… reasoning and conclusion on the liability of the defendants in negligence and nuisance… The only problem that arises is whether the learned judge is shown to be wrong in deciding to grant the equitable remedy of an injunction which will necessarily have the effect that the ground which the defendants have used as a cricket ground for 70 years can no longer be used for that purpose… So on the facts of this case a court of equity must seek to strike a fair balance between the right of the plaintiffs to have quiet enjoyment of their house and garden…and the opportunity of the inhabitants of the village in which they live to continue to enjoy the manly sport which constitutes a summer recreation for 54
The Structure of the Common Law adults and young persons, including one would hope and expect the plaintiffs’ son. It is a relevant circumstance which a court of equity should take into account that the plaintiffs decided to buy a house which in June 1972 when completion took place was obviously on the boundary of a quite small cricket ground where cricket was played at weekends and sometimes on evenings during the working week. They selected a house with the benefit of the open space beside it… [T]hey must have realised that it was the village cricket ground, and that balls would sometimes be knocked from the wicket into their garden, or even against the fabric of the house. If they did not realise it, they should have done. As it turns out, the female plaintiff has developed a somewhat obsessive attitude to the proximity of the cricket field and the cricketers who visit her to seek to recover their cricket balls. The evidence discloses a hostility which goes beyond what is reasonable, although as the learned judge found she is reasonable in her fear that if the family use the garden while a match is in progress they will run the risk of serious injury… It is reasonable to decide that during matches the family must keep out of the garden… With all respect, in my view the learned judge…does not appear to have had regard to the interest of the inhabitants of the village as a whole. Had he done so he would in my view have been led to the conclusion that the plaintiffs having accepted the benefit of the open space marching with their land should accept the restrictions on enjoyment of their garden which they may reasonably think necessary… There are here special circumstances which should inhibit a court of equity from granting the injunction claimed…
Notes and questions 1
2
‘“Actions’” do not form a part of modern civil codes, and this is not merely, as might be thought, because procedure has come to be recognised as something very different from substantive law. Though related to procedure, the subject of “actions” had never been equivalent to it… An “action” is…, as was a “form of action” to the common lawyer, an instrument of attack, and the correct instrument must be chosen for the attack contemplated… Whether, in logic, the right or the remedy comes first is not for discussion here, but if we ask the question historically, there is no doubt that in the majority of cases at Rome it was the remedy… [T]he Roman…thus often said “I have an action” where a modern man would be as likely to say “I have a right”’ (Jolowicz, Roman Foundations of Modern Law, 1957, Oxford, OUP, pp 75–76, 77). Is this an accurate description of modern English law as well? Does Lord Denning nevertheless use the notion of a ‘right’ as an integral part of his reasoning? Or does he base his decision on the notion of an “interest’? ‘It may be that, in some jurisprudential theory, it is possible to classify as a legal right some claims which will not be enforced by the court, but on a practical level the existence of a right depends upon the existence of a remedy for its infringement’ (Oliver LJ in Techno-Impex v Gebr Van Weelde [1981] 1 QB 648, p 672). What is meant by remedy in this context—a form of action or an actual remedy, such as damages or rescission? Was it the 55
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remedy of the injunction that determined the rights in Miller v Jackson? If so, what role did the cause of action in nuisance play? 3 How did Lord Denning know that the animals did not mind the cricket? 4 What if the Millers’ household insurance premiums had been raised as a result of the possible danger of cricket balls: could the Millers have claimed this expense from the club? 5 What if the Millers continued to sit in their garden during cricket matches and Mrs Miller was hit, and seriously injured, by a cricket ball: would the club be liable? Could the club raise the defence of contributory negligence? 6 Conversion requires an act denying the plaintiffs title in his movable property: is merely playing with another’s cricket ball conversion? Is it a trespass? If the owner of the land refused to return the cricket ball, would he be liable today for conversion? (Cf Torts (Interference with Goods) Act 1977.) 7 The court awarded modest damages: was this in lieu of an injunction? 8 What if the Millers had bought the house in the middle of winter? 9 How many separate reasons does Lord Denning give to support his decision? 10 Is this, in effect, an estoppel case? 11 Consider the notion of the ratio decidendi of a case. What is the ratio decidendi of Miller v Jackson? 12 Was it unreasonable of the female plaintiff to develop ‘a somewhat obsessive attitude’ given that the judge found that she was reasonable in her fear of serious injury? Is this case a good example of a court deciding a case through the manipulation of the facts rather than the law? What if the facts had involved some sport other than a ‘manly sport’: would the result have been different? Bryant v Herbert (1877) 3 CPD 389 Court of Appeal (See p 114.)
Notes 1
One of the similarities said to exist between Roman and English law is the historical foundation on a system of forms of action. In English law, these actions were the result of the early administrative writs required for entry into the royal courts; trespass, debt, detinue, trover, nuisance, habeas corpus, certiorari and others were the ‘instruments of attack’ and these were later supplemented by Chancery remedies such as account, injunction, rescission and rectification. The common law writs shaped English mentality in that each writ gave expression not only to its own particular procedural and remedial rules but equally to fundamental substantive ideas. Substantive law was ‘secreted in the interstices of procedure’ (Maine, Early Law and Custom, 1890, John Murray, p 389). 56
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2
These English forms of action stand in rather stark contrast to developments on the continent. Even by late Roman times, actions had merged with obligations (Dig 44.7) and the emphasis was more and more on the systematisation of iura themselves increasingly being viewed as ‘rights’ attaching to the individual (persona, individuum). Nevertheless, this does not mean that the Roman forms of action have not left their mark on the codes. The law of contract remains divided into named and unnamed contracts, which is a hangover from the different species of contractual actions in Roman law, and these old Roman forms are to be found elsewhere in private law (see, for example, CC, Arts 1372, 1376). In addition, the ‘multiplicity of special proceedings deriving from the different legal transactions and situations of substantive law’ is ‘an unfortunate holdover from the old system of forms of action’ (Vescovi, IECL, Vol XVI, Chapter 6, para 381). Such special proceedings (actions) include the difference between possessory and revindication claims, commercial and ordinary proceedings, marital disputes, minors and guardianship and so on. Even more modern civilian thinking cannot always escape from distinctions between public and private actions, ordinary and summary proceedings or contentious and non-contentious jurisdiction (Vescovi, paras 382–85). Actions may have given way to a law of subjective rights, but beneath these rights, and their remedies, are to be found the traces, if not structures, of older forms of claim.
6 THE ROLE OF LEGAL CATEGORIES
(a) Introduction In Roman law, the institutional system acted not just as a means of linking the social and the legal worlds: it also acted as the basis for legal classification. Law was to be divided into three areas, each representing the institutional emphasis: the law of persons, the law of things and the law of actions. Within these generic categories, there were further subdivisions expressly, or implicitly, recognised by the Romans themselves. Thus, the law of persons could be subdivided into personality and status (a development that owes more to the modern civilian jurists) and the law of things into property and obligations; remedies, of course, could be subdivided into real (in rem) and personal (in personam) claims. However, there remains another important division recognised by the Romans which is still of the utmost importance today: at the beginning of the Digest, the Roman jurist Ulpian tells us that the law falls into two branches—the ius publicum and the ius privatum. The former is concerned with the interests of the State, while the latter is concerned with the private interests of individuals. 57
Sourcebook on Obligations and Remedies In re State of Norway’s Application [1990] 1 AC 723 House of Lords Lord Goff:… In France, as in other civil law countries, civil matters are categorised as a matter of substance and are regarded as limited to private law matters, excluding public law matters and in particular fiscal matters. There appears to be little doubt that, in most if not all civil law countries, an important distinction is drawn between private law and public law, and that public law matters are generally excluded from civil or commercial matters. In theory…an English court would not treat a matter as civil or commercial which would, by English law, fall to be classified as criminal… [Proceedings in any civil matter should include all proceedings other than criminal proceedings, and proceedings in any commercial matter should be treated as falling within proceedings in civil matters. On this simple approach, I do not see why the expression should be read as excluding proceedings in a fiscal matter… In his case note… Dr FA Mann stated that: ‘…it can be asserted with confidence that very few states (if any) will ever regard a tax claim as a civil or commercial matter.’ I myself have little doubt that this is broadly true in the case of most civil law countries, with their classification of law into public law (including fiscal matters) and private law matters (with which alone civil and commercial matters are concerned)… But, so far as common law countries are concerned, the matter is, on the material before your Lordships’ House, completely unresolved…
Notes and questions 1
2
The Divisions of English law are much less clear-cut than those of most other legal systems, and there has been much less discussion of what the divisions should be. The absence of clear divisions is principally attributable to two factors. First, the jurisdiction of the higher courts is unified, for they can deal with all justiciable matters, whether public, private, commercial, civil or criminal; divided jurisdictions tend to create, unified jurisdictions to conceal or prevent divisions of law. Secondly, English law has grown in bits according to need and was not laid down in slices by an act of will, and “any system of law in which legal rules are always created ad hoc must at its best lack form and symmetry” (Stone). Codes, by the application they require and the commentaries they induce, make lawyers think that the law is divided in a certain way; England has no codes in this sense. Since, then, it is unimportant to the English lawyer to which type of court or book he should turn in order to solve his problem, the law tends to seem seamless’ (Weir, The common law system’, IECL, Vol II, Chapter 2, Part III, para 82). Would a division into public and private law help with the solving of case law problems? Take a case like Dorset Yacht (p 645): would this have been decided the same way in France? What about Blackpool and Fylde (p 436)? In English law, the division into public and private law is by no means as 58
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3
4
pronounced as it is in France—indeed, the division has traditionally been unrecognised at the formal level. Nevertheless, at the level of remedies there is an important distinction between judicial review and a claim for damages, and this remedial distinction implies that the common law adheres to a dichotomy between public and private interests (R v Secretary of State for Education ex p Avon CC [1991] 1 QB 558, p 561). Perhaps where the common law differs from the civil law is in its failure to develop, at the institutional level, a notion of the State: common lawyers, as Lord Diplock once recognised, continue to rely upon the notion of the ‘Crown’ to represent government and the (so called) public interest (Town Investments Ltd v Dept of Environment [1978] AC 359, pp 380–81). And this reliance on a feudal institution has tended to engender a legal structure that sees all institutions as ‘private’ in the sense of having their own personality and particular interests. The Crown or a local authority, in this scheme, is like any other (commercial) organisation. Accordingly, when it comes to litigation, it has its own interest to advance and to protect with the result that there is little room for civil law ideas like le bien public or the ‘equality before public burdens principle’. Does such a mentality encourage secrecy? The distinction between civil and commercial law does not have its formal roots in Roman law in the sense that the distinction is to be found in the Corpus Iuris Civilis. It is more a creature of the later civil law. After the Dark Ages, the expansion of trade in the late Middle Ages gave rise to special legal requirements. However, customary law was very inadequate to meet these, often rather contradictory, needs of confidence, credit, speed and security. Roman law brought a much more developed and sophisticated technique, above all in the area of the law of obligations. Yet this very conceptual sophistication could equally be an obstacle, since it did not always accord with practice. The refusal of Roman law to recognise the partnership (societas) as a corporate legal person was a particular problem. On the other hand, the ius commune (Roman and canon law) did make some major contributions: the development of a flexible law of contract based on the will of the parties is one notable example. These obstacles and advantages meant that commercial practice took ideas from where it could and adapted them for its own advantage (Hilaire, Introduction historique au droit commercial, 1986, PUF, pp 14–19). Gradually, a literature developed devoted entirely to commercial customs and court decisions (Szramkiewicz, Histoire du droit des affairs, 1989, Montchrestien, pp 63–64). In France, the increasing State centralisation and economic regulation in the era of Louis XIV resulted in commercial law becoming a subcategory of public law. Indeed, the attempt at codification by Colbert confirmed commercial law as a separate branch of law in France and, while it no longer formally forms part of public law, it still has its own code. Should commercial law be considered, today, as 59
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part of economic law? And, if so, should economic law be seen as belonging both to public and to private law? Is the case law of the European Court of Justice to be classified under public, private or commercial law?
(b) Civil and criminal law Fisher v Bell [1961] 1 QB 394 Queen’s Bench Division (See p 24.)
Questions 1 2
This case is often regarded as a contract problem. Why? Is it really an obligations case? Is criminal law part of public or private law? Archer v Brown [1985] QB 401 Queen’s Bench Division This was an action for damages in deceit by the victim of a fraud perpetrated by the defendant. The defendant had sold the victim share capital in a company for £30,000, having already sold the shares to others. In addition to the claim for return of the £30,000, the victim claimed damages: (i) for bank charges and interest incurred in raising the £30,000; (ii) for his injured feelings; and (iii) for exemplary damages. The defendant argued that he was liable only for rescission of the contract and for the return of the £30,000. The judge held that the victim was entitled to damages under heads (i) and (ii). Peter Pain J: This case arises out of a swindle practised upon the plaintiff by the defendant… In cases of fraudulent misrepresentation the plaintiff has always been entitled to damages as well as rescission… In cases of innocent misrepresentation a plaintiff was entitled to rescission only until recently. This was considered to work injustice and the Misrepresentation Act 1967 was passed to put this matter right. Even if the defendant’s misrepresentation had been innocent the plaintiff would in my opinion have been entitled to claim damages as well as rescission by virtue of s 2 of that Act… While it is true that the measure of damages is different in tort and in contract, it makes no difference which measure one applies in this case: the damages are the same. The damages which flow from the defendant’s deceit are no different from what must have been in the reasonable contemplation of the parties at the time of the contract… I do not think that the argument that the defendant could not make a profit here defeats the plaintiff’s claim. It seems to follow from what Lord Diplock said in Broome v Cassell and Co Ltd that the wrongdoer may be caught if he weighs the risk of loss against the chance of getting away with it. In this case, as one sees from the course of proceedings, the defendant could well have got away with it against a less determined plaintiff. But what seems to put the claim under this head out of court is the fact that exemplary damages are meant to punish and the defendant has been punished. Even if he wins his appeal he will have spent a considerable time in gaol. It is not surprising that 60
The Structure of the Common Law there is no authority as to whether this provides a defence, since there is no direct authority as to whether exemplary damages can be given in deceit. I rest my decision on the basic principle that a man should not be punished twice for the same offence. Since he has undoubtedly been punished, I should not enrich the plaintiff by punishing the defendant again… In recent years, damages for injured feelings have been awarded in a number of cases sounding in contract… I now have to ask myself: is there any reason why these damages should sound in breach of contract and not in deceit?… I find nothing in the passages…from the speeches of Lord Hailsham of St Marylebone LC and Lord Diplock in Broome v Cassell and Co Ltd which should extend their doubts whether exemplary damages should be awarded for deceit to aggravated damages for deceit. I cannot help wondering whether the close relationship between contract and deceit mentioned by Lord Hailsham of St Marylebone LC is the reason why exemplary damages have not been awarded in deceit. Sachs LJ’s reference to the Theft Act 1968 in his judgment in Mafo v Adams leads me to ask whether the true reason why there is no reported case where exemplary damages have been given for deceit is that most deceits are punishable by the criminal law and that it would therefore be inappropriate to award exemplary damages. If this be so, then it is no reason for refusing to award damages which are compensatory for injured feelings. I can see no reason in logic or justice why such damages should not be awarded in deceit on the same basis as in contract. The authorities make it plain that the sum awarded should be moderate. In the light of the findings of fact which I have already made I think a sum of £500 would be appropriate under this head…
Notes and questions 1
2 3
4
The distinction between civil and criminal law, though probably that best understood today by laymen, is not primitive. It is indeed a commonplace to point out how in an early state of society wrongs such as assault and murder, which we regard now as typical subjects for criminal law, are treated as giving rise merely to a sort of action for damages at the suit of the party injured or his relatives, and that these damages are the substitute for the yet more primitive right to vengeance… Even in its most advanced period Roman law still kept traces of the old confusion between crime and tort in the penal damages it allowed, for example, in furtum, and ‘punitive’ damages which combine punishment with reparation are familiar in English law’ (Jolowicz, Lectures on Jurisprudence, 1963, Athlone, pp 344, 345). Does the English law of tort still have a punitive element? Is the development of criminal law dependent on a notion of the ‘State’? To what extent should one person be liable in private law for crimes committed by another person under his, her or its control? Should victims of crimes be able to use the criminal trial process to obtain full compensatory damages? What are the arguments against such a procedure? The relationship between the law of tort (see Chapter 7) and criminal law 61
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is still close in a number of areas. The crime of public nuisance will give rise to a damages action in tort if the plaintiff suffers special damage (see Mint v Good, p 675) and the breach of a criminal statute may give also rise to a damages claim in certain circumstances (see pp 758–60). A person who suffers damage, injury or loss while involved in a criminal activity may be prevented from recovering compensation either in contract or in tort; much will depend upon the circumstances (see, for example, Geismar v Sun Alliance Insurance, p 602). Consider some examples. D shoots P, a burglar who has just broken into D’s house: can P sue D for his injuries? P contracts with D for D to transport P’s very heavy piece of machinery from Liverpool to London and on the way the lorry crashes as a result of being overloaded: can P sue for his badly damaged machine if he acquiesced in the overloading? P, very drunk, encourages D, also very drunk, to drive badly; if the car crashes and P is injured, can he sue D?
(c) Contract Moschi v Lep Air Services Ltd [1973] AC 331 House of Lords Lord Diplock: The law of contract is part of the law of obligations. The English law of obligations is about their sources and the remedies which the court can grant to the obligee for a failure by the obligor to perform his obligation voluntarily. Obligations which are performed voluntarily require no intervention by a court of law. They do not give rise to any cause of action. English law is thus concerned with contracts as a source of obligations. The basic principle which the law of contract seeks to enforce is that a person who makes a promise to another ought to keep his promise. This basic principle is subject to an historical exception that English law does not give the promisee a remedy for the failure by a promisor to perform his promise unless either the promise was made in a particular form, for example, under seal, or the promisee in return promises to do something for the promisor which he would not otherwise be obliged to do, that is, gives consideration for the promise… Each promise that a promisor makes to a promisee by entering into a contract with him creates an obligation to perform it owed by the promisor as obligor to the promisee as obligee. If he does not do so voluntarily there are two kinds of remedies which the court can grant to the promisee. It can compel the obligor to pay to the obligee a sum of money to compensate him for the loss that he has sustained as a result of the obligee’s failure to perform his obligation. This is the remedy at common law in damages for breach of contract. But there are some kinds of obligation which the court is able to compel the obligor actually to perform. In some cases…a remedy to compel performance by a decree of specific performance or by injunction is also available. It was formerly obtainable only in a court of equity… But, since a court of common law could make and enforce orders for payment of a sum of money, where the obligation was itself an obligation to pay a sum of money, even a court of common law could compel the obligor to perform it… 62
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Questions 1 How does one recognise a set of facts as being contractual? 2 In Fisher v Bell (above, p 24), if the owner of the shop had sold the knife on credit to the buyer, and the buyer had failed to pay the debt, could the owner have sued the buyer for a contractual debt? 3 If an employee of a supermarket steals goods from his employer and sells them to an acquaintance in his local pub, could the employee sue the acquaintance if the latter failed to pay for the goods? Could the supermarket sue the acquaintance? 4 Besides contract, what are the other parts of the law of obligations? Notes 1
2
The notion of a law of contract goes back to Roman law, from where it found its way into modern European law through the rediscovery in the 11th century of Justinian’s compilation of the writings of the Roman jurists and of imperial legislation published in 533AD (Corpus Iuris Civilis). The succession of continental jurists from medieval to modern times who worked on these sources took the Roman law of contracts from its fragmented nature to a general theory of contract (Samuel and Rinkes, Law of Obligations and Legal Remedies, 1996, Cavendish Publishing, pp 1– 9). A range of Roman characteristics are still to be found in the contract sections of all the modern codes, but a Roman jurist would not recognise the modern style of presenting private law in terms of codes. Nor, probably, would he recognise the notion of a general theory of contract based on the will theory (CC, Art 1134), although the idea is stimulated by a Roman text (Dig 50.17.23). In terms of legal style, the Roman jurist would be more comfortable in the common law system where contract is founded upon concrete cases (Weir (1992) 66 Tulane LR 1615). Despite the historical emphasis on the form of the action, to say that contract was unknown in England before the 18th century would be to misinterpret legal history. The Court of Chancery had been familiar with (Romanist) contractual notions long before the industrial revolution and academic writing since the Middle Ages was well acquainted with Roman law (and thus the law of contract) (Gordley, The Philosophical Origins of Modern Contract Doctrine, 1991, OUP). But contract as a dominant legal institution is largely a creature of the 19th century common law, and it is during this period that it reached its ‘classical’ form (Atiyah, The Rise and Fall of Freedom of Contract, 1979, OUP). The basic principles of offer and acceptance, consideration, terms and breach were all worked out—or, more accurately, imported from the codes (Simpson (1975) 91 LQR 247)—during the period between the end of the 18th century and the beginning of the 20th century (Samuel and Rinkes, pp 75–82). The result was that many of the older forms of liability founded on status, debt and bailment became 63
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completely submerged under the new doctrine. Indeed, even the noncontractual debt claims were rationalised in terms of implied contract or equitable property rights (Sinclair v Brougham [1914] AC 398), and it is only today that the courts are beginning to rethink and reformulate at a theoretical level the categories of debt liability (Kleinwort Benson v Glasgow CC, p 71). Whether an English contract can be seen as a form of private legislation as in France (CC, Art 1134) is not easy to determine, since its basis is in promise rather than agreement (below, p 402). But freedom of contract was, until the consumer society of the postwar period, the dominant ideology of the courts. And, even today, contract, as an aspect of commercial law, is an instrument for businesses to establish their own rights and duties and it is for the courts to enforce these terms without regard to notions such as good faith (Photo Production, p 552; cf UNIDROIT, Art 1.1; PECL, Art 1:102). Only where consumers (interpreted widely?) are concerned will the courts take a more interventionist approach (Interfoto, p 409). In all the continental codes, the part or book devoted to the law of obligations is dominated by the law of contract. In the French Code civil, non-contractual obligations take up only a few articles compared with the large number dealing with contract in general and with the various named contracts. Contracts are binding agreements—a legal chain (vinculum iuris) between two people (J 3.13pr)—which, in some systems, as we have seen, have the force of private legislation. Any failure, for whatever reason, to perform such an obligation is regarded as a nonperformance (inexécution) with the result that liability for such nonperformance starts out from the reason for non-performance (CC, Art 1147; PECL, Art 8:101). Was the non-performance the result of the contractor’s fault? Did the contractor undertake to guarantee a result or did he undertake only to use skill and care? This idea of liability being based on fault comes from Roman law (Dig 13.6.5.2, 7; below, p 389) and is still a central feature of the modern civil law (PECL, Art 8:108; Treitel, Remedies for Breach of Contract, 1988, OUP, Chapter 2). However, the actual position is more complex, since liability (la responsabilité contractuelle) in contract is linked to the formation and contents of the contractual obligation itself, and this may depend on the actual facts of the contract problem in issue (see, for example, Boy note to TGI Paris 5.5.1997, Dalloz Jur 558; cf Atias Dalloz 1998 Chron 137). The point to be stressed, then, is that contract and liability in contract must be distinguished to the extent that the former is concerned with rights (obligationes, iura, droits subjectifs) while the latter is primarily a matter of remedies (actiones). Thus, when viewed from the position of compensation based on either fault (obligation de moyens) or strict liability (obligation de résultat), there is little difference between contractual and non-contractual liability. This makes it possible for the 64
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law of tort to ‘fill in the gaps’ of the law of contract (see, for example, White v Jones, p 702) (but cf ‘tort’, below). In English law, the distinction between contract and liability ex contractu is particularly important, since the law of remedies (debt, damages, injunction, specific performance, rescission, etc) is relatively independent from the law of rights (contract and tort) (see, for example, Co-op v Argyll, p 253; cf PECL, Art 9:102). Certainly contractual liability in English law can, at first sight, appear to transcend the forms of action mentality, since contract is a subject seemingly dominated by rules which are capable of being codified in much the same way as in the civil codes (McGregor, Contract Code: Drawn up on behalf of the English Law Commission, 1993, Giuffrè). However, remedies respond not so much to rights, but to causes of action, and thus liability in contract is founded on the idea, not of nonperformance of an obligation as such, but of a breach of contract. This notion of breach is in turn related to the theoretical foundation of contract in English law, which is not conventio (agreement), but promise. Contractual liability arises from a breach of promise and historically such a cause (form) of action for breach was as much delictuel (tort of deceit) as contractual. Some contractual liability cases are thus difficult to distinguish from noncontractual compensation claims (see, for example, Blackpool and Fylde, p 436). The idea of non-performance is not, however, absent from the common law of contract, since a contractor may be prevented from performing as a result of an event beyond his control (doctrine of frustration) or because the non-performer is under no actual obligation to perform as in a unilateral contract. Consequently, it is on occasions important to distinguish a claim based on breach of contract (usually a claim for damages) from one based on non-performance (usually a refusal to pay a debt) (see, for example, Vigers v Cook, p 516; Bolton v Mahadeva, p 226). Difficult questions can also arise not only about whether the nonperformance was a breach (Joseph Constantine, p 523), but also whether the defendant had actually promised the result claimed by the plaintiff (see, for example, Readhead v Midland Ry, p 543; Thake v Maurice, p 547; Supply of Goods and Services Act 1982) (cf obligation de moyens and obligation de résultat).
(d) Tort Donoghue v Stevenson [1932] AC 562 House of Lords Lord Atkin: My Lords, the sole question for determination in this case is legal: Do the averments made by the pursuer in her pleading, if true, disclose a cause of action? I need not restate the particular facts. The question is whether the manufacturer of an article of drink sold by him to a distributor, in 65
Sourcebook on Obligations and Remedies circumstances which prevent the distributor or the ultimate purchaser or consumer from discovering by inspection any defect, is under any legal duty to the ultimate purchaser or consumer to take reasonable care that the article is free from defect likely to cause injury to health. I do not think a more important problem has occupied your Lordships in your judicial capacity: important both because of its bearing on public health and because of the practical test which it applies to the system under which it arises. The case has to be determined in accordance with Scots law…but my own research, such as it is, satisfies me that the principles of the law of Scotland on such a question as the present are identical with those of English law; and I discuss the issue on that footing. The law of both countries appears to be that in order to support an action for damages for negligence the complainant has to show that he has been injured by the breach of a duty owed to him in the circumstances by the defendant to take reasonable care to avoid such injury. In the present case we are not concerned with the breach of the duty; if a duty exists, that would be a question of fact which is sufficiently averred and for present purposes must be assumed. We are solely concerned with the question whether, as a matter of law in the circumstances alleged, the defender owed any duty to the pursuer to take care… At present I content myself with pointing out that in English law there must be, and is, some general conception of relations giving rise to a duty of care, of which the particular cases found in the books are but instances. The liability for negligence, whether you style it such or treat it as in other systems as a species of ‘culpa’, is no doubt based upon a general public sentiment of moral wrongdoing for which the offender must pay. But acts or omissions which any moral code would censure cannot in a practical world be treated so as to give a right to every person injured by them to demand relief. In this way rules of law arise which limit the range of complainants and the extent of their remedy. The rule that you are to love your neighbour becomes in law, you must not injure your neighbour; and the lawyer’s question, who is my neighbour? receives a restricted reply. You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. Who, then, in law is my neighbour? The answer seems to be—persons who are so closely and directly affected by my act that I ought reasonably to have them in contemplation as being so affected when I am directing my mind to the acts or omissions which are called in question. This appears to me to be the doctrine of Heaven v Pender… There will no doubt arise cases where it will be difficult to determine whether the contemplated relationship is so close that the duty arises. But in the class of case now before the court I cannot conceive any difficulty to arise. A manufacturer puts up an article of food in a container which he knows will be opened by the actual consumer. There can be no inspection by any purchaser and no reasonable preliminary inspection by the consumer. Negligently, in the course of preparation, he allows the contents to be mixed with poison. It is said that the law of England and Scotland is that the poisoned consumer has no remedy against the negligent manufacturer. If this were the result of the authorities, I should consider the result a grave defect in the law, and so contrary to principle that I should hesitate long before following any decision to that effect which had not the authority of this House. I would point out that, in the assumed state of the authorities, not only would the consumer have no remedy against the manufacturer, he would have none against any one else, for in the circumstances alleged there would be no evidence of negligence 66
The Structure of the Common Law against any one other than the manufacturer; and, except the case of a consumer who was also a purchaser, no contract and no warranty of fitness, and in the case of the purchase of a specific article under its patent or trade name, which might well be the case in the purchase of some articles of food or drink, no warranty protecting even the purchaser-consumer… I do not think so ill of our jurisprudence as to suppose that its principles are so remote from the ordinary needs of civilised society and the ordinary claims it makes upon its members as to deny a legal remedy where there is so obviously a social wrong… In my opinion, several decided cases support the view that in such a case as the present the manufacturer owes a duty to the consumer to be careful… Lord Buckmaster (dissenting):… The principle contended for must be this: that the manufacturer, or indeed the repairer, of any article, apart entirely from contract, owes a duty to any person by whom the article is lawfully used to see that it has been carefully constructed. All rights in contract must be excluded from consideration of this principle; such contractual rights as may exist in successive steps from the original manufacturer down to the ultimate purchaser are ex hypothesi immaterial. Nor can the doctrine be confined to cases where inspection is difficult or impossible to introduce. This conception is simply to misapply to tort doctrine applicable to sale and purchase. The principle of tort lies completely outside the region where such considerations apply, and the duty, if it exists, must extend to every person who, in lawful circumstances, uses the article made. There can be no special duty attaching to the manufacture of food apart from that implied by contract or imposed by statute. If such a duty exists, it seems to me it must cover the construction of every article, and I cannot see any reason why it should not apply to the construction of a house. If one step, why not 50? Yet if a house be, as it sometimes is, negligently built, and in consequence of that negligence the ceiling falls and injures the occupier or any one else, no action against the builder exists according to the English law, although I believe such a right did exist according to the laws of Babylon…
Notes and questions 1
If it is not contract it must be tort, said Bramwell LJ in Bn/ant v Herbert (see p 114). Damages claims that could not be accommodated under contract were put into a separate category of ‘tort’, an Anglo-Norman word meaning ‘wrong’. Tort is seen as an equivalent category to contract, yet it is actually rather different, in that it is not a normative obligation in itself. There is no such thing as a ‘breach of tort obligation’ (Bradford Corpn v Pickles, p 222). In order to succeed in a tort claim, the plaintiff must establish a specific cause of action such as trespass, negligence, nuisance, defamation, conversion, interference with contract (or whatever: see Rudden, ‘Torticles’ (1991–92) 6/7 Tulane Civil Law Forum 105). Failure to plead and to prove a specific cause of action will result in failure of the damages action (Esso v Southport, p 216). 67
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3
In 1897, a judge recognised a general right not to be physically harmed by an intentional (malicious) act of another (Wilkinson v Downton, p 640). But this would seem not to be reducible to a general pre-existing ‘duty’ (Stubbings v Webb [1993] AC 498, p 508). However, in Donoghue v Stevenson, the House of Lords recognised a general duty of care not carelessly to injure another. It would appear, then, that English law has moved some way towards a general non-contractual obligation for physical damage based upon fault (Letang v Cooper [1965] 1 QB 232; cf CC, Art 1382). Damage is usually the starting point of tort (but cf defamation); however, economic loss presents problems when it comes to the tort of negligence and breach of statutory duty (and see Birse Construction v Haistie, p 617). With respect to liability without fault (liability for people or things under one’s control), it is by no means easy to establish any general principle similar to CC, Art 1384. The decision in Rylands v Fletcher (p 660) could have acted as the basis for such a general principle, but the House of Lords has consistently refused to develop any such strict liability principle (Read v J Lyons and Co, p 662; Cambridge Water v Eastern Counties Leather, p 665). The result is that the UK law is out of line with many of its EU partners. Tort thus remains a rather fragmented subject protecting a whole range of different interests and, as a result, it is impossible to think in terms of a general theory (as the notes that follow indicate; and see, in particular, Chapter 7). ‘We have had several compendious theories as to the law of tort. Lynxeyed predecessors who noticed that a tort suit often resulted in a transfer of funds from the defendant to the plaintiff inferred that it was the purpose of tort law to effect such transfers: the more transfers the better, or tort was being false to its purpose. This was especially true if the defendant could spread the loss, very thinly like jam, so that no one could taste it… An appropriate basis for discriminating between plaintiffs would be according to whether they were the victims of misfortune or of mismanagement, of bad luck or of bad behaviour, that is, whether they have just a pain or a grievance as well, whether we can say of them that, the world being what it is, they should not have been hurt… The purpose of fault would be to determine not who must pay but who may claim, to distinguish between plaintiffs rather than between defendants. And we would also distinguish according to the nature of the harm in issue, and make the law reflect society’s proper value judgments by letting people recover more easily in respect of personal injury than financial harm, and for property damage only if it also represented financial loss to them…’ (Weir, ‘Governmental liability’ [1989] PL 40, pp 62–63). Is fault a realistic criterion for determining who should receive compensation in road accident cases? Was Mrs Donoghue the victim of misfortune or of mismanagement—of bad luck or of bad behaviour? 68
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What if the manufacturer had been able to prove that, on average, only one bottle in a million was defective? ‘It is submitted that a suitable criterion is to be found in the concept of risk and that a satisfactory body of legal rules could quite rapidly be developed by the courts if in every case they were to pose the question “Whose risk was it that this damage might occur?” in place of the present “Whose fault was it that this damage did occur?”. It is essential, however, that the traditional refusal of the courts to consider the factor of insurance be reversed. It is perhaps this refusal of the courts to face up to the facts of contemporary life which has led them to overlook loss distribution as it already exists and to insist on fault as the criterion of liability as if every defendant had to find the damages from his own pocket’ (Jolowicz, ‘Liability for accidents’ [1968] CLJ 50, p 60). If this thesis had been applied to Dorset Yacht (p 645), what would have been the result? What about Best v Samuel Fox (p 615)? ‘The real weakness of the insurance argument is that insurance is essentially a group or social phenomenon, whereas the common law of obligations is concerned with individuals. Disputes between individuals do not provide a good medium through which to decide what is the best pattern of insurance in a particular area… As Weinrib says, the invocation of insurance in tort disputes undermines the conception of tort law as concerned with the immediate personal interaction of the doer and the sufferer of harm’ (Cane, Tort Law and Economic Interests, 1991, OUP, p 460). Is the problem here an institutional one? If one were to move towards insurance-based liability, would the law of persons need rethinking? Is the law of tort founded upon the interests of individuals or the interest of groups (or classes) of individuals? ‘It cannot lightly be taken for granted, even as a matter of theory, that the purpose of the law of tort is compensation, still less that it ought to be, an issue of large social import, or that there is something inappropriate or illogical or anomalous (a question-begging word) in including a punitive element in civil damages, or conversely that the criminal law, rather than the civil law is in these cases the better instrument for conveying social disapproval, or for redressing a wrong to the social fabric… As a matter of practice English law has not committed itself to any of these theories, it may have been wiser than it knew…’ (Lord Wilberforce in Cassell and Co Ltd v Broome [1972] AC 1027, p 1114). Ought punitive damages ever to be awarded in traffic accident cases? If the law of tort is not about compensation, what is, or are, its aim(s)? Could one run a whole tort course simply devoted to theories of tort? If one could run such a course, what would this tell us about legal knowledge?
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(e) Restitution (unjust enrichment) Kleinwort Benson Ltd v Birmingham CC [1997] QB 380 Court of Appeal Evans LJ: During the 1980s a number of local authorities entered the financial markets in order to trade in a new form of derivative, known as interest rate swaps contracts. Then the courts held that these contracts were ultra vires the local authorities and therefore void: Hazell v Hammersmith and Fulham London Borough Council [1992] 2 AC 1. That judgment launched what has been called a great raft of litigation… More than 100 writs were issued, mostly in the Commercial Court, claiming to recover the net amounts which had been paid out by one party or the other under the void contracts… The right of recovery…was established by a number of judgments… The claims fall within the principle of unjust enrichment, giving the plaintiffs a right to restitution which the courts have upheld… The principle of unjust enrichment is recognised in English as in other systems of law. It requires the recipient of money to repay it when the circumstances are such that it is contrary to ‘the ties of natural justice and equity’ for him to retain it; cf Lord Mansfield CJ’s celebrated dictum in Moses v Macferlan (1760) 2 Burr 1005, p 1012. How those circumstances may be identified has been the subject of countless judicial decisions over the centuries. A number of recognisable forms of action emerged from the mists of legal history. These entitled the plaintiff to recover, not damages, but a quantified sum from the defendant who was not necessarily a wrongdoer and who was not bound by any contract or express undertaking to pay the sum claimed by the plaintiff. The circumstances in which such a non-contractual obligation can arise are various; the recovery of money paid under a mistake of fact (though not, historically and so far as English law is concerned, under a mistake of law), or where the consideration in return for which the money paid has failed, are well-established examples. Now, the mists have cleared still further. It is recognised that these different forms spring from a single underlying principle, which is described as the right to recover on grounds of unjust enrichment; that is to say, the defendant has been unjustly enriched by the payment made to him and which the plaintiff seeks to recover… That the principle forms part of English law has been authoritatively recognised in two recent judgments of the House of Lords: Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 and Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70. Notwithstanding its roots in natural justice and equity, the principle does not give the courts a discretionary power to order repayment whenever it seems in the circumstances of the particular case just and equitable to do so… So the search for rules defining the circumstances in which the general principle gives a remedy continues, and it is subject as always to the binding authority of previous decisions. But the two House of Lords judgments recognise that this is a developing area of the law and that the courts should be ready to apply the general principle when it is appropriate and consistent with authority to do so…
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The Structure of the Common Law Saville LJ:… The basis for this kind of unjust enrichment claim lies in the fact that the only right the payee can assert to the money he has received is that created by the contract under which it was paid. If that contract is void, then it inexorably follows that this right does not exist, and the payee has no right to that money. The payee is thus unjustly enriched, since there is no justification for the retention of money to which he has no right. Leaving aside defences such as change of position, that injustice can only be corrected by returning the money to the payer, whose performed obligation to pay only arose under the same contract. That obligation to pay is correlative to the payee’s right to receive and retain the payment, and likewise does not in fact exist if the contract is void. In short the payer was under no obligation to part with his money, nor the payee any correlative right to receive or retain it. Justice is done by imposing an obligation on the payee to repay the payer… Kleinwort Benson Ltd v Glasgow CC [1996] QB 678 Court of Appeal; [1999] 1 AC 153 House of Lords Millett LJ (Court of Appeal): The principal question in this appeal is whether a claim to recover money paid under a contract which is ultra vires the recipient is a matter ‘relating to a contract’ within Art 5(1) of the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters, commonly known as the Brussels Convention. More generally, it is whether the word ‘contract’ in that article is capable of including a contract which is void because it is beyond the capacity of one of the parties… In considering whether a claim is to be regarded as falling within Art 5(1) (or Art 5(3)), therefore, it is wrong to ask whether the claim would be characterised as contractual (or tortious) under domestic law. The correct approach is to ask whether, for the purposes of the Convention, which applies to a number of Member States with different national laws and systems of characterisation, the defendant should broadly be regarded as being sued in a matter ‘relating to a contract’ (or tort, delict or quasi-delict). The jurisdictional criteria must be interpreted by reference to the system and objectives of the Convention in order to ensure that it is effective. Those objectives include legal certainty, consistency, the avoidance of parallel proceedings, and the avoidance of possibly conflicting decisions in different jurisdictions. The principal rationale for the special jurisdictions conferred by Art 5 is that there should be, in certain clearly defined situations, ‘a particularly close connecting factor between a dispute and the court which may be called upon to hear it, with a view to the efficacious conduct of the proceedings’: the Martin Peters case [1983] ECR 987, p 1002, para 11. [Emphasis added.] It is to be observed that jurisdiction is not allocated according to the remedy sought. Provided that the matter relates to a contract, the jurisdiction conferred by Art 5(1) is available whether the plaintiff seeks to enforce the contract, either specifically or by way of damages for breach, or to escape from it and recover money paid under it. Some restitutionary claims, at least, fall within Art 5(1). Further, jurisdiction is not allocated by reference to the cause of action. The words ‘matters relating to a contract’ are intentionally indefinite. They are designed to get away from technical classifications of causes of action in national laws, which may well differ. The expression ‘matters relating to a 71
Sourcebook on Obligations and Remedies contract’ is not, in my opinion, to be equated with ‘contractual causes of action’ or ‘the enforcement of contractual obligations’ or even ‘claims based on contract’. There seems no doubt that, while national laws of contract differ, there is a general sense in which the word contract is understood by the signatories to the Convention. English notions of consideration and privity must be discarded. But at its irreducible minimum a contract is a consensual arrangement intended to create legal relations and to be legally enforceable. So I come at last to the central question: ‘Does the word ‘contract’ in Art 5(1) include a void contract?’ The authorities say: ‘No. A void contract is a nullity. It is not a contract. It has no legal effect. It gives rise to no legal obligations. There is no place of performance. If one party claims to recover money paid pursuant to it, his claim is not a contractual claim. The action lies in restitution, not contract. The recipient’s obligation to repay is not a contractual obligation. It does not arise from the void contract, which is incapable of generating any legal rights and obligations. It arises solely by reason of the original payment and because the recipient would be unjustly enriched if he were allowed to retain it.’ These are powerful arguments, but I am not persuaded by them. They appear to me to depend upon the kind of analysis which is employed by a national law in the classification of causes of action for domestic purposes rather than the very broad and unanalytical approach which the Convention requires. Even if every Member State treats a contract as a nullity if one of the parties lacks capacity, this should not be treated as if it were a rule of natural law and of universal application. In the present case the parties purported to enter into a contract. They assumed obligations to each other and intended them to be legally enforceable. The payments were made and received on an agreed basis, and are explicable only by reference to the supposed contract. When parties act pursuant to such a contract, the intended place of performance is no less relevant a connecting factor because the contract is afterwards found to be void. I can see no reason, as a matter of language, why the word ‘contract’ in Art 5(1) should not include ‘void contract’ and the expression ‘place of performance of the obligation in question’ should not mean ‘intended place of performance of the supposed obligation’. There is a real difference between the case where negotiations have not led to a concluded contract, where there is no contract at all, and the case where they have led to a contract, so that there is an agreement in fact, but one of the parties lacks contractual capacity, so that there is no contract in law. Every legal system has to make provision for contracts which are defective for one reason or another. They may lack the necessary legal formalities; they may be contrary to public policy or illegal; they may be made by a party without capacity or by an agent without authority; they may contain some unresolved uncertainty or ambiguity, or be incomplete in some material particular; or the consent of one of the parties may be vitiated by mistake or misrepresentation or duress or some other factor. The consequences of these defects may differ. Some may make the contract void; others may make it voidable; still others may make it merely unenforceable. But these are merely 72
The Structure of the Common Law useful shorthand methods of describing the different legal consequences which follow from the defect in question. A defect which renders a contract void in one jurisdiction may merely make it voidable in another. A voidable contract which is avoided may be treated as void ab initio in one jurisdiction and not in another. In English law want of capacity, like mistake, sometimes makes a contract void and sometimes makes it voidable. A contract entered into by a party acting ultra vires is void; a contract entered into by a minor, or a person under the influence of drink, or a person of unsound mind, is voidable. A contract which is properly described as void is not necessarily a complete nullity. A contract which is entered into by an agent without authority, for example, does not impose any legal obligations upon the principal, but it may afterwards be ratified by him. So it is best to lay aside these terms when considering the meaning of Art 5(1) of the Convention. They merely tell us what the consequences of the defect are in national law. That is not relevant to the allocation of jurisdiction under the Convention, which must be ascertained independently of the national laws of the Member States. The question, therefore, is not whether a contract which is ‘void’ under national law is a contract for the purposes of Art 5(1), but whether a contract which is ultra vires one of the parties is such a contract… Three considerations persuade me that it is also correct. First, in most cases the validity of the contract will be in issue. It would not be consistent with the objectives of the Convention if a court having jurisdiction to decide the validity of the contract did not also have jurisdiction to decide the consequences; or if it had jurisdiction to grant relief in one event and not in the other. It should not be necessary in order to found jurisdiction that the claimant should be compelled to allege the validity of the contract if its invalidity is not seriously disputed. Secondly, it is often notoriously difficult to distinguish between contractual and restitutionary causes of action. Claims in quantum meruit, for example, are usually thought of as contractual, and in most situations are clearly ‘matters relating to a contract’. But there is a respectable case for classifying all such claims as restitutionary, and in some situations they clearly are. The remedy is available, for example, at least in English law, even where the party who received the benefit of the services lacked contractual capacity. Jurisdiction under the Convention should not depend upon such nice distinctions of the national laws. Thirdly, if the claim is properly regarded as a matter ‘relating to a contract’, then the court having jurisdiction under Art 5(1) is the court for the place where the supposed contractual obligation should have been performed, not the place where the unjust enrichment occurred and the restitutionary obligation arose. This produces a scheme for the allocation of jurisdiction which is both coherent and satisfying. Suppose P agrees to buy goods from D, the goods to be delivered in London and payment to be made in Frankfurt. P pays for the goods, but the goods are not delivered. P has a choice of remedies. He can sue D for damages for breach of contract, bringing the action in England, the place where the obligation to deliver the goods should have been performed. Or he can treat the contract as discharged by breach and sue to recover the payment for a total failure of consideration. 73
Sourcebook on Obligations and Remedies The nature of the remedy sought does not prevent the action from being tried in England, the place of performance of the contractual obligation the breach of which has given rise to the relief claimed. Next, suppose that after one consignment has been delivered, D refuses to deliver any more, and alleges want of contractual capacity. P may accept this or dispute it. If he accepts it, or it is established, he is entitled to recover the payment after giving credit for the value of the consignment delivered. It makes no sense to deprive the court in England of jurisdiction to try the action, England being the intended place of performance of the supposed obligation the failure to perform which has given rise to the relief sought. The factor which connects the dispute with England is the same whether D’s contention that he lacked contractual capacity is right or wrong. The authority’s arguments all proceed from three basic assumptions: (1) that all Member States recognise the existence of three categories of civil action, contractual, delictual and restitutionary, with broadly the same lines of demarcation; (2) that all restitutionary claims must be treated alike; and (3) that they fall outside Art 5(1) and (3). In my view, the structure of the Convention precludes that analysis. Its failure to provide specifically for restitutionary claims must, I think, be due to a recognition of the fact that they overlap with contractual and delictual claims and that the lines of demarcation are not identical in the various national laws. A claim to recover money paid under a valid contract where there has been a total failure of consideration, for example, is a restitutionary claim in a contractual context; restitutionary claims for wrongs are delictual or quasi-delictual; a claim by the victim of fraud to trace and recover his money would not be classified by English law as either contractual or delictual, but in civilian systems which deny the possibility of restitutionary proprietary claims it would probably be classified as delictual. Accordingly, I reject the authority’s submission that all restitutionary claims necessarily fall outside Art 5. For the reasons I have endeavoured to express, I accept the bank’s submission that a claim to recover money paid under a supposed contract which is rendered abortive by the recipient’s want of contractual capacity is a matter ‘relating to a contract’ within Art 5(1). I am not deterred by the need to read the word ‘contract’ in that article as meaning ‘void contract’ or the expression ‘place of performance of the obligation in question’ as ‘intended place of performance of the supposed obligation’. I would leave it for future consideration whether the word ‘contract’ is capable of including ‘anticipated contract’, but I would not exclude it as a possibility. Many civilian systems require good faith in the negotiation of a proposed contract. Is a breach of such an obligation not ‘a matter relating to a contract?’ I pose the question, not to suggest an answer, but to indicate that the answer is not obvious… Roma locuta est, causa finita non est. I would allow the appeal. Leggatt LJ (Court of Appeal) (dissenting):… In 1981, there came into existence a new type of financial transaction known as an interest rate swap contract. Such contracts are of many kinds. But in its simplest form it consists of an agreement between two parties whereby one pays to the other, over a period of months or years, sums calculated by reference to the difference between a fixed rate of interest and the current market rate of interest from
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The Structure of the Common Law time to time. The principal sum is purely notional and exists solely for the purpose of calculating the obligations of the parties to pay differences. The essential feature of the transaction is that it is a futures contract, the financial outcome of which depends on future movements in interest rates. From about 1982 interest rate swap contracts came to be used by a number of local authorities, of which Glasgow was one. In September 1982, Glasgow entered into seven transactions with Kleinwort. In Hazell v Hammersmith and Fulham London Borough Council [1992] 2 AC 1, the House of Lords held that all such transactions were void ab initio for lack of capacity to enter into them. There followed many claims in the Commercial Court, mostly by banks against local authorities. In the first such action Hobhouse J held in Westdeutsche Landesbank Girozentrale v Islington London Borough Council (1993) 91 LGR 323 that the bank was entitled to recover from the local authority the balance standing to the credit of the local authority when the transactions were aborted by the decision of the House of Lords. That decision was upheld in this court [1994] 1 WLR 938, but judgment is still awaited in a further appeal to the House of Lords [see now [1996] AC 669, below, p 799]. The writ in the present action was issued on 6 September 1991. It sought restitution of the sum of £807,230, then standing to the credit of Glasgow under the seven interest swap transactions to which I have referred... ... Most European jurisdictions, including England and Scotland, regard restitution as a separate cause of action from contract and tort. The Martin Peters case [1983] ECR 987 shows that under Community law the court will assume jurisdiction even in a case where the relationship between the parties is not contractual but only akin to contract. But there still is a continuing consensual basis for the action. The point of conferring a special jurisdiction for contractual matters is that there may be expected to be a connection between the place of performance of the obligation in question and the courts for that place. Here the cause of action arises only because there proved not to be any contractual relationship between the parties. They had of course contracted with each other in the belief that they were entering into an enforceable contract. The place where the contract was, or would have been, performed, if it had been enforceable, is quite irrelevant. Thus the quirk that the contracts provided for payment in London is happenstance and has nothing to do with the question whether money thus paid should be repaid. To accord to the English courts jurisdiction it would be necessary to construe the phrase ‘matters relating to a contract’ as meaning ‘matters relating to a relationship which the parties erroneously believed to be contractual’. As Professor Guest puts it in Chitty on Contracts, 27th edn, 1994, Vol 1, p 19, para 1–023: A void contract is strictly a contradiction in terms, because if an agreement is truly void it is not a contract; but the term is a useful one and well understood by lawyers. Properly speaking, a void contract should produce no legal effects whatsoever. Neither party should be able to sue the other on the contract… If money has been paid, it should be recoverable by an action in restitution, because the money was not due.
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Sourcebook on Obligations and Remedies Here there was a relationship between the parties which was akin to contract, but it was bereft of legal effect when transactions of that nature were adjudged by the House of Lords to be void… It is said that, if the claim in restitution is regarded as a matter ‘relating to a contract’, the ‘obligation’ relied on is to repay, and if that occurs it will be in London. But in Art 5(1) the phrase ‘performance of the obligation in question’ most naturally refers to the performance prescribed by the contract of relevant contractual obligations: in other words, the payment in London of money due under the supposed contract. That has nothing to do with the claim in restitution, which is concerned with the repayment of money received by Glasgow… … This action is based not on tort or delict, but on unjust enrichment, and is accordingly not within Art 5(3). In my judgment, the judge came to the right conclusion on this point also. It is 13 years now since the void transactions were entered into. So far this litigation has benefited only the lawyers. It had taken four hearings, including two in this court, to decide which court should determine the dispute. No doubt that is because Glasgow know that they will be likely to lose in this country, and hope that they might do better in Scotland. If no appeal is permitted to their Lordships’ House on the issue of jurisdiction, the time may not be far off when a court will determine whether Glasgow should part with the balance that happened to stand in their favour when it became apparent that their contracts with Klein wort were void. Already the aggregate costs probably exceed the sum at issue. Omnia Romae cum pretio… Lord Goff (House of Lords):… In truth, the claim in the present case is simply a claim to restitution, which in English law is based upon the principle of unjust enrichment; and claims of this kind do not per se fall within Art 5(1)… May I by way of postscript express my indebtedness to the written observations of the Federal Republic of Germany to the Court of Justice in the present case, prepared by Professor Dr Christof Böhmer. These observations are of particular relevance because, as appears from the Jenard Report, the wording of Art 5(1) of the Convention was influenced by German law. It is of significance that, as Dr Böhmer records, the unanimous view in German case law and literature has hitherto been that Art 5(1) does not cover claims based on unjust enrichment… … I find myself to be in agreement with the conclusion reached by Hirst J, and by Leggatt LJ in his dissenting judgment in the Court of Appeal. I would, therefore, allow the appeal… Lord Clyde (House of Lords):… The claim which is being made by Klein wort in the present case is simply and solely a claim for restitution. That is not a claim based on contract but a claim based on the principle of unjust enrichment. The remedy of restitution is in a category distinct from that of contractual remedies. That appears to be the position not only in England and Scotland but also in at least a number of other States in Europe. That the parties purported to enter into a contract which turned out to be void ab initio is a matter of background history, too remote from the claim now made to be related to a contract in the sense intended by Art 5(1), even if what is now agreed to be a void contract can properly be called a contract at all. In
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The Structure of the Common Law the present case the plaintiffs do not seek to found on any contract; indeed their claim is one which is pursued in the absence of any contract. There is no contractual obligation forming the basis of their claim… … I would allow the appeal. Lord Hutton (House of Lords):… I would allow this appeal. Lord Nicholls (House of Lords) (dissenting):… It would be surprising and unfortunate if, having decided that the contract is null and void, the same court cannot proceed to decide on the restitutionary consequences following directly from this. What matters is not whether the consequential relief is classified by English or Scottish law or the law of some other Contracting State as part of its national law of contract or part of its national law of restitution. What matters is that, however labelled, the relief is no more than part of the effective determination of a dispute relating to a contract. It is one facet of a single dispute…
Notes and questions 1
2
The most striking inroad into the contract and tort dichotomy has been the acceptance in recent years of what Lord Wright in 1943 called the ‘third category of the common law which has been called quasi-contract or restitution’ (Fibrosa v Fairbairn, p 778). Quasi-contract was recognised, of course, but it was subsumed under the category of contract. Equally, many of the equitable remedies used in restitution cases, if they were not able to be squeezed within the contract and tort dichotomy, were classified under trusts. Today, all this is changing. The common law is in the process of adopting the independent category of restitution based upon the normative principle of unjust enrichment (no one should be unjustly enriched at the expense of another) (see, for example, Swiss CO, Art 62). It is probably true to say that there has not yet been a complete break with the law of causes of action and equitable remedies; that is to say, there is no general enrichment action based directly upon the unjust enrichment principle. In order to succeed in a restitution claim, the plaintiff must bring himself within an existing head of claim, such as money had and received, or within the scope of an established remedy, such as tracing. Nevertheless, the value of the unjust enrichment principle lies in the fact that it can act not just as a common denominator for a whole range of debt, damages and equitable remedy cases (see Chapter 8), but as counterpoint both to the fault principle and to the promissory obligation (but cf Lister v Romford Ice, p 534). In civil law systems, restitution is part of the law of obligations and thus stands in contrast to proprietary claims; in the common law, however, there is an intermixing within the category or restitution, of in rem and in personam remedies. This can cause confusion when comparison is made
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3
with Roman and continental law (see, generally, Lipkin Gorman, p 782; Westdeutsche Landesbank v Islington LBC, p 799). Does Glasgow represent a return to a ‘forms of action’ approach to legal liability? Is it really realistic to say that the cause of action was unconnected with a contract?
(f) Property (1): real and personal property Beswick v Beswick [1966] Ch 538 Court of Appeal; [1968] AC 58 House of Lords (See also p 249.) Lord Denning MR (Court of Appeal):… Section 56(1) of the Law of Property Act 1925 says that: A person may take an immediate or other interest in land or other property, or the benefit of any condition, right of entry, covenant or agreement over or respecting land or other property, although he may not be named as a party to the conveyance or other instrument and by s 205(1)(xx) ‘Property’ includes any thing in action, and any interest in real or personal property. Apply that section to this case. The promise of the nephew to pay the widow £5 a week was a ‘thing in action’: for the simple reason that it could be enforced by action, namely, an action by the contracting party. This section says, as clearly as can be, that the widow can take the benefit of the agreement, although she is not named as a party to it. Seeing that she is to take the benefit of it, she must be able to sue for it, if not by herself alone, at least jointly with the contracting party. Otherwise the section is made of no effect. Ubi jus, ibi remedium. If there was, therefore, any doubt as to her ability to sue at common law or equity, that doubt is removed by this section. I adhere, therefore, to the view which I expressed on this section in Smith and Snipes Hall Farm v River Douglas Catchment Board and Drive Yourself Hire Co (London) Ltd v Strutt: and I am fortified by the judgment which Danckwerts LJ is about to deliver… Danckwerts LJ (Court of Appeal):… The definition of ‘property’ in s 205(1)(xx) ‘includes any thing in action, and any interest in real or personal property’. The section replaces s 5 of the Real Property Act 1845 and applies to personal as well as real property. The Act of 1845 only applied to real property, and presumably there was some intelligible object in the extension. The new section obviously cannot be confined to covenants running with the land. Why should the section not be taken to mean what it says? There really is no ambiguity. The section says that ‘A person may take…the benefit of…any agreement over or respecting land or other property, although he may not be named as a party to the conveyance or other instrument’. The section seems to have come as a shock to conventional lawyers who could not believe their eyes, but the section does say that a person not a party can take the benefit of a contract. Faced with the unexpected and unfamiliar
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The Structure of the Common Law there has been a tendency to take a timorous view of the provisions of this section… Lord Guest (House of Lords):… It may be that the draftsman in incorporating the wide definition of ‘property’ into s 56 had overlooked the result which it would have on the effect of this section by extending it beyond its predecessor. I am constrained to hold that if s 56 is to replace the previous law in s 5 of the Act of 1845, this can only be done by limiting the word ‘property’ in s 56 to real property and thereby excluding the wide definition of ‘property’ contained in s 205(1)(xx). The result is that the respondent has, in my view, no right to sue on the agreement of 14 March 1962 in her individual capacity…
Notes and questions 1 2 3 4 5
6
Is the House of Lords’ decision in this case an example of the courts ignoring the actual words of a statute? Are obligations property? If so, can one own a debt? (Cf Lipkin Gorman, p 782.) Are all rights forms of property? From a law of actions viewpoint, did the plaintiff succeed in her debt claim? (Cfp 249.) ‘[T]he common law systems differ radically from the civil law. Thus, although the distinction between real and personal rights is perfectly well understood by common law lawyers, its various applications are thought of as belonging not to property law but to the law of remedies, including the law of insolvency; and the much discussed question whether the beneficiary of a trust has a real or only a personal right is of little more than academic significance. Moreover, such personal claims arising out of contracts as debts are, along with industrial property such as patents, treated as property under the generic term of choses in action. Again, the relativity of most titles to things, and the frequent co-existence of interests in them, make it unprofitable to pay much attention to ownership…’ (Lawson, ‘Structural variations in property law: comparative conclusion’, IECL, Vol VI, Chapter 2, Part VIII, para 274). Do Western legal systems need a definition of ownership? When one talks of ‘interest’ in the context of the law of property, does it have a special meaning? ‘Initially…it will seem a little strange that property language should be chosen to express claims which have hitherto belonged largely within the public law domain… But this merely goes to underline the fact that, in some important sense, all property rights enjoy an inherent public law character’ (Gray, ‘Equitable property’ [1994] CLP 157, pp 210–11). In English law, has ownership not always been a public law as much as a private law device? Is this a result of feudalism?
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(g) Property (2): bailment Building & Civil Engineering Holidays Scheme Management Ltd v Post Office [1966] 1 QB 247 Court of Appeal Lord Denning MR:… At common law, bailment is often associated with a contract, but this is not always the case, see R v McDonald, Meux v Great Eastern Railway. An action against a bailee can often be put, not as an action in contract, nor in tort, but as an action on its own, sui generis, arising out of the possession had by the bailee of the goods, see Winfield on the Province of the Law of Tort, p 100, Fifoot’s History of the Common Law, p 24; Midland Silicones v Scrutton. The incidents of this cause of action are not to be found by looking at the old books on detinue and trover. We have outlived those forms of action, together with trespass and case, see Letang v Cooper. Suffice it to say at the present day that if goods, which have been delivered to a bailee, are lost or damaged whilst in his custody he is liable to the person damnified (who may be the owner or the bailor) unless the bailee proves that the loss or damage is not due to any fault on his part, see Coldman v Hill, per Scrutton LJ… At common law in a case of bailment, the general principle is restitutio in integrum, which means that the party damnified is entitled to such a sum of money as will put him in as good a position as if the goods had not been lost or damaged. This is subject, however, to the qualification that the damages must not be too remote, that is, they must be such damages as flow directly and in the usual course of things from the loss or damage, see The Argentina. If the party damnified suffers damage of a special kind, he is entitled to recover it, subject to the qualification that the damages must not exceed such damages as would be produced in the ordinary course of things by the act complained of, see Cony v Thames Ironworks. When goods are lost or damaged in transit, the damage ordinarily produced is, in the case of loss, the cost of replacement; or in the case of damage, the cost of repair. That is the amount which, in the absence of contract, the bailor can recover. He cannot recover indirect or consequential damages (such as loss of profits on a business) because those can only be recovered in cases on contracts proper, where notice of special circumstances is brought home, see British Columbia Saw-Mill Co v Nettleship… Morris v CW Martin & Sons Ltd [1966] 1 QB 716 Court of Appeal This was an action by the owner of a mink stole for its value brought against a firm of cleaners. The owner had sent her mink stole to one Beder, a furrier, for cleaning and Beder, with the owner’s consent, gave it to the defendants to clean. The defendants’ employee who was supposed to clean it stole it instead. The trial judge held the defendants not liable; an appeal to the Court of Appeal was allowed. Lord Denning MR:… [W]hen a principal has in his charge the goods or belongings of another in such circumstances that he is under a duty to take all reasonable precautions to protect them from theft or depredation, then if he entrusts that duty to a servant or agent, he is answerable for the manner in which that servant or agent carries out his duty. If the servant or agent is careless so that they are stolen by a stranger, the master is liable. So also if the
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The Structure of the Common Law servant or agent himself steals them or makes away with them. It follows that I do not think that Cheshire v Bailey can be supported. The job-master was clearly under a duty to take all reasonable precautions to protect the goods from being stolen, either as a bailee for reward or under the contract. He entrusted that duty to the coachman and must be answerable for the way in which the coachman carried out that duty; and it is all the same whether he did it negligently or fraudulently and whether he did it for his master’s benefit or his own benefit. The decision cannot survive Lloyd v Grace, Smith and Co and should be overruled… Diplock LJ:… Duties at common law are owed by one person to another only if there exists a relationship between them which the common law recognises as giving rise to such duty. One of such recognised relationships is created by the voluntary taking into custody of goods which are the property of another. By voluntarily accepting from Beder the custody of a fur which they knew to be the property of a customer of his, they brought into existence between the plaintiff and themselves the relationship of bailor and bailee by sub-bailment. The legal relationship of bailor and bailee of a chattel can exist independently of any contract, for the legal concept of bailment as creating a relationship which gives rise to duties owed by a bailee to a bailor is derived from Roman law and is older in our common law than the legal concept of parol contract as giving rise to legal duties owed by one party to the other party thereto. The nature of those legal duties, in particular as to the degree of care which the bailee is bound to exercise in the custody of the goods and as to his duty to redeliver them, varies according to the circumstances in which and purposes for which the goods are delivered to the bailee. But we are concerned here with conversion. This is a breach of a particular duty common to all classes of bailment. While most cases of bailment today are accompanied by a contractual relationship between bailee and bailor which may modify or extend the common law duties of the parties that would otherwise arise from the mere fact of bailment, this is not necessarily so—as witness gratuitous bailment or bailment by finding… One of the common law duties owed by a bailee of goods to his bailor is not to convert them, that is, not to do intentionally in relation to the goods an act inconsistent with the bailor’s right of property therein. (See Caxton Publishing Co Ltd v Sutherland Publishing Co, per Lord Porter.) This duty, which is common to all bailments as well as to other relationships which do not amount to bailment, is independent of and additional to the other common law duty of a bailee for reward to take reasonable care of his bailor’s goods. Stealing goods is the simplest example of conversion; but, perhaps because in his classic judgment in Coggs v Bernard Sir John Holt CJ discusses the circumstances in which bailees are liable to their bailors for the loss of goods stolen not by the servant of the bailee but by a stranger, some confusion has, I think, arisen in later cases through failure to recognise the co-existence of the two duties of a bailee for reward; to take reasonable care of his bailor’s goods and not to convert them—even by stealing.
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Sourcebook on Obligations and Remedies If the bailee in the present case had been a natural person and had converted the plaintiffs fur by stealing it himself, no one would have argued that he was not liable to her for its loss. But the defendant bailees are a corporate person. They could not perform their duties to the plaintiffs to take reasonable care of the fur and not to convert it otherwise than vicariously by natural persons acting as their servants or agents. It was one of their servants to whom they had entrusted the care and custody of the fur for the purpose of doing work upon it who converted it by stealing it. Why should they not be vicariously liable for this breach of their duty by the vicar whom they had chosen to perform it? Sir John Holt, I think, would have answered that they were liable ‘for seeing that someone must be the loser by this deceit it is more reason that he who employs and puts a trust and confidence in the deceiver should be the loser than a stranger’: Hern v Nichols… Salmon LJ:… A bailee for reward is not answerable for a theft by any of his servants but only for a theft by such of them as are deputed by him to discharge some part of his duty of taking reasonable care. A theft by any servant who is not employed to do anything in relation to the goods bailed is entirely outside the scope of his employment and cannot make the master liable. So in this case, if someone employed by the defendants in another depot had broken in and stolen the fur, the defendants would not have been liable. Similarly in my view if a clerk employed in the same depot had seized the opportunity of entering the room where the fur was kept and had stolen it, the defendants would not have been liable. The mere fact that the master, by employing a rogue, gives him the opportunity to steal or defraud does not make the master liable for his depredations: Ruben v Great Fingall Consolidated. It might be otherwise if the master knew or ought to have known that his servant was dishonest, because then the master could be liable in negligence for employing him… (See also p 458.)
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Does bailment as a notion in itself give rise to duties and rights, or do the duties and rights associated with bailment arise from the law of contract and tort (conversion, trespass and negligence)? Is bailment part of the law of obligations? D delivers goods to P by mistake. An employee of P, thinking the goods belong to his employer, uses them while going about his work and is badly injured because the goods are defective. Can the employee claim compensation from D or P? Can P obtain compensation from D? A bailee incurs expenditure looking after a bailor’s goods. Is the bailor under a duty to reimburse the bailee? If so, what is the legal source of this duty? In Morris v Martin, what one difference of fact might have allowed the defendants to have escaped liability?
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Morris v Martin should also be read in the law reports (and see p 458 below), for in addition to the bailment question there was a problem concerning an exclusion clause in the contract between bailee and subbailee. Why was the plaintiffs right not affected by the clause? Was her status as a consumer relevant? Are Diplock LJ’s last two sentences in the extract above of great relevance from a legal reasoning point of view? Is he basing his decision on a different legal notion from that of Salmon LJ?
(h) Equity English v Dedham Vale Properties Ltd [1978] 1WLR 93 Chancery Division This was an action for damages and (or) an account of profits in equity brought by the vendors of a bungalow and land against the purchasers, a property company. Before conveyance of the property the purchasers had, without the knowledge of the vendors, successfully applied for planning permission using the name of the vendors, and the plaintiffs only became aware of what had happened after conveyance. The judge held that, although the purchasers were not guilty of fraud, they were liable in equity to account to the plaintiffs for the profit they had made as a result of the increase in the value of the land on the granting of planning permission. Slade J:… In my judgment, in the end the question of the liability, if any, of the defendants to account must depend on the view which the court takes as to the nature of the relationship subsisting between them and the plaintiffs at the date when the planning application was made. The liability to account would, in my judgment, arise if, though only if, the relationship was in the eyes of equity a fiduciary one in the sense that it imposed relevant fiduciary duties on the defendants towards the plaintiffs… Counsel for the defendants in effect submitted that the mere making of a planning application could not by itself have given rise to any such relationship when none would have otherwise existed. I see the force of this submission but am not in the end convinced by it. My reasons may be put in the form of two general propositions. (1) Where during the course of negotiations for a contract for the sale and purchase of property, the proposed purchaser, in the name of and purportedly as agent on behalf of the vendor, but without the consent or authority of the vendor, takes some action in regard to the property…which, if disclosed to the vendor, might reasonably be supposed to be likely to influence him in deciding whether or not to conclude the contract, a fiduciary relationship in my judgment arises between the two parties. (2) Such fiduciary relationship gives rise to the consequences that there is a duty on the proposed purchaser to disclose to the vendor before the conclusion of the contract what he has done as the vendor’s purported agent, and correspondingly, in the event of nondisclosure, there is a duty on him to account to him for any profit made in the course of the purported agency, unless the vendor consents to his retaining it…
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Sourcebook on Obligations and Remedies On my analysis of the facts of the present case, the plaintiffs never consented to the defendants…purporting to make the planning application as their agent before contract; the fact that this had been done was never disclosed to them before the exchange of contracts; and they never consented to the defendants retaining the profit ultimately received by them as a result of the making of the planning application. In these circumstances, they are in my judgment accountable for such profit…
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‘Although the principle of distinction between important parts of a legal system should be easy to identify and state, this is not possible for the division of English law into law and equity, since one cannot identify equity either by its sphere of application or by the intrinsic nature of its rules. The doctrines of equity are not confined to any particular area of substantive law; they have had differing effects in most areas at different times… Nor is there any unifying principle within the system of equity. Whereas common law is conceivable as an independent and coherent though defective system, equity is not autonomous at all, but rather presupposes the law or is built round and upon it…’ (Weir, The common law system’, IECL, Vol II, Chapter 2, Part III, para 89). Does this mean that equity cannot be defined as an independent system of law? Are the remedies of equity independent? ‘There is no precisely defined law setting limits to the equitable jurisdiction of a court to relieve against undue influence. This is the world of doctrine, not of neat and tidy rules. The courts of equity have developed a body of learning enabling relief to be granted where the law has to treat the transaction as unimpeachable unless it can be held to have been procured by undue influence. It is the unimpeachability at law of a disadvantageous transaction which is the starting point from which the court advances to consider whether the transaction is the product merely of one’s own folly or of the undue influence exercised by another. A court in the exercise of this equitable jurisdiction is a court of conscience. Definition is a poor instrument when used to determine whether a transaction is or is not unconscionable: this is a question which depends upon the particular facts of the case’ (Lord Scarman in National Westminster Bank v Morgan [1985] AC 686, p 709). Are the equitable rules governing contractual transactions part of the law of contract or should they be seen as independent or as part of the law of actions (remedies)? Is Lord Scarman saying that equity cannot be reduced to rules? ‘When a servant, or agent, by a breach of duty damnifies his master or principal, the latter can, of course, recover in an ordinary action for breach of contract for any loss he has actually suffered. But there is a well established class of cases in which he can so recover, whether or not he has suffered any detriment in fact. These are cases in which the servant or 84
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agent has realised a secret profit, commission or bribe in the course of his employment; and the amount recoverable is a sum equal to such profit… This amount the plaintiff can recover, either as money had and received to his use, or as an equitable debt…’ (Asquith LJ in Reading v R [1949] 2 KB 232, p 236). Are the equitable principles governing account part of the law of obligations? Could it be said that secret profits and the like belong to the principal? What exactly is meant by ‘equitable debt’: is it an action for an account?
7 THE ROLE OF THE CATEGORIES OF PUBLIC AND PRIVATE LAW
(a) Introduction In re State of Norway’s Application [1987] QB 433 Court of Appeal Kerr LJ:… [T]he common law does not—or at any rate not yet—recognise any clear distinction between public and private law. But the division is beginning to be recognised… Mercury Communications Ltd v Director General of Telecommunications [1996] 1WLR 48 House of Lords Lord Slynn:… The recognition by Lord Diplock [in O’Reilly v Mackman [1983] 2 AC 237] that exceptions exist to the general rule may introduce some uncertainty but it is a small price to pay to avoid the over-rigid demarcation between procedures reminiscent of earlier disputes as to the forms of action and of disputes as to the competence of jurisdictions apparently encountered in civil law countries where a distinction between public and private law has been recognised. It is of particular importance, as I see it, to retain some flexibility as the precise limits of what is called ‘public law’ and what is called ‘private law’ are by no means worked out. The experience of other countries seems to show that the working out of this distinction is not always an easy matter. In the absence of a single procedure allowing all remedies—quashing, injunctive and declaratory relief, damages—some flexibility as to the use of different procedures is necessary. It has to be borne in mind that the overriding question is whether the proceedings constitute an abuse of the process of the court… R v Somerset CC ex p Fewings [1995] 1 WLR 1037 Court of Appeal Sir Thomas Bingham MR:… The point is often made that unelected unrepresentative judges have no business to be deciding questions of potentially far-reaching social concern which are more properly the preserve of elected representatives at national or local level. In some cases the making of such decisions may be inescapable, but in general the point is well made. In the present case it certainly is. The court has no role whatever as an arbiter between those who condemn hunting as barbaric and cruel and those who support it as a traditional country sport more humane in its treatment of 85
Sourcebook on Obligations and Remedies deer or foxes (as the case may be) than other methods of destruction such as shooting, snaring, poisoning or trapping. This is of course a question on which most people hold views one way or the other. But our personal views are wholly irrelevant to the drier and more technical question which the court is obliged to answer. That is whether the county council acted lawfully in making the decision it did on the grounds it did. In other words, were members entitled in reaching their decision to give effect to their acceptance of the cruelty argument? In seeking to answer that question it is, as the judge very clearly explained, pp 523–25, critical to distinguish between the legal position of the private landowner and that of a land-owning local authority. To the famous question asked by the owner of the vineyard (Is it not lawful for me to do what I will with mine own?’ St Matthew, Chapter 20, verse 15) the modern answer would be clear: ‘Yes, subject to such regulatory and other constraints as the law imposes.’ But if the same question were posed by a local authority the answer would be different. It would be: ‘No, it is not lawful for you to do anything save what the law expressly or impliedly authorises. You enjoy no unfettered discretions. There are legal limits to every power you have.’ As Laws J put it, p 524, the rule for local authorities is that any action to be taken must be justified by positive law…
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Ownership (dominium) and sovereignty (imperium) remain fundamental concepts in modern Western legal systems. However, between the civil law and common law there are a number of important differences. On the continent, the gradual development of the State, as a public legal person, out of the Roman notions of civitates and respublica permitted legal theory to develop imperium as a specific legal relationship between individual and the State. In England, on the other hand, constitutional legal thinking never developed beyond the Crown (Town Investments Ltd v Dept of Environment [1978] AC 359, p 380); it is, then, much more difficult to think in terms of a strict dichotomy between sovereignty (imperium) and private rights (dominium). Nevertheless, public bodies are not free to act in the same way as private commercial bodies (see Wheeler v Leicester CC [1985] AC 1054.) In addition to the ius publicum/ius privatum and imperium/dominium distinctions, Roman law also distinguished between private and public actions (Dig 47.23.1). However, the actiones populares (popular actions) were incorporated into the private law of obligations and thus became part of private law in respect of the substantive rights (iura) that they expressed (Dig 44.7.5.5). This intermixing of public and private actions finds expression, to some extent, in the action civile in modern civil law (although criminal law is treated as part of private law in France) and, in the common law, in compensation orders (Powers of the Criminal Courts Act 1973, s
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35) and the torts of breach of statutory duty and public nuisance. Do these kinds of claims raise both dominium and imperium issues? Where the exercise of imperium prejudiced individuals, later civil law, with the help of canon law, developed specific public law procedures by which an interested party could appeal (appelare) against an administrative—or indeed judicial—decision (Mestre, Introduction historique au droit administratif frangais, 1985, PUF, pp 14CM1). Such an administrative appeal procedure has resulted, today, in two quite separate recours. There is, first, the normal appeals process; this process is now seen simply as part of civil procedure, that is to say the hierarchy of the courts. (But is civil procedure public or private law?) Secondly, there are separate public law remedies for use against administrative decisions: here the courts are reviewing, to put it in Roman law terms, the decisions of those charged with imperium (cf Dig 49.4.1.3) to see if they have exceeded their powers (recours pour excès de pouvoir). Equally, in the common law, the judicial review remedies (Supreme Court Act 1981, s 31), although quite separate from actions in debt and damages (cf Wandsworth LBC v Winder [1985] AC 461), are not always easily distinguishable from appeals (cf Chief Constable ofN Wales v Evans [1982] 1 WLR 1155, pp 1174–75). Moreover, some remedies (habeas corpus, declaration and injunction) cannot, in themselves, be easily classified as either public or private. Several specific questions arise. To what extent can, and should, private law remedies be available for the infringement of public law rights? To what extent should private law remedies be allowed to infringe constitutional rights? (Cf Derbyshire CC v The Times [1993] AC 534.) Should public law remedies ever be available for the protection of private rights? Does the remedy of damages raise special problems with respect to imperium? Are relator actions public or private claims? (Cf Gouriet v UPOW [1978] AC 435.) To what extent do these public and private law of actions issues interrelate with the law of persons (for example, with respect to dignity or privacy)? To what extent can the existence of public law remedies influence the availability of private law claims? Does the Human Rights Act 1998 add to these complications? The confusion at the level of actions and procedure between the public and the private might suggest that the categories of public and private law are outdated (Harlow (1980) 43 MLR 241; cf Samuel (1983) 46 MLR 558; (1988) 8 LS 277). Yet the difference is fundamental to the French model, if not to civil law in general, and the difference has resulted in quite specific legal developments. The most notable is in respect of administrative liability, where compensation for damage resulting from State action in France is founded upon a quite different basis from ordinary civil liability. In particular, the role of the risk and the equality 87
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principle stand in sharp contrast to the role of fault in English law (Jolowicz [1985] CLJ 370). The public/private debate thus remains important for the comparative obligations lawyer. However, does the distinction between public and private law actually have any relevance in late 20th century economies? The distinction is vague and tenuous, and perhaps arises not so much from the different matter of public and private law as from the different remedies which may be sought; the Divisional Court dealing with an application for [judicial review] seems to think differently from a puisne judge hearing a claim for damages’ (Weir, The common law system’, IECL, Vol II, Chapter 2, Part III, para 129). Is this difference in thinking engendered by a difference of remedies or a difference of substance? How is the thinking different? Once utilities like gas, water, electricity and railways are privatised, should they immediately be the subject of a different legal regime? What about a commercial corporation whose shares are purchased by the State? (Cf Norweb plc v Dixon [1995] 1 WLR 636.)
(b) Administrative contracts Roy v Kensington and Chelsea Family Practitioner Committee [1992] 1 AC 624 House of Lords A doctor brought, inter alia, an action in debt against his Family Practitioner Committee for breach of contract. The FPC sought to have the claim struck out as an abuse of process on the basis that the relationship between a doctor and the FPC was a matter only of public law and that the sole remedy available to the doctor was an action for judicial review. The House of Lords refused to strike out the claim. Lord Bridge:… I do not think the issue in the appeal turns on whether the doctor provides services pursuant to a contract with the family practitioner committee. I doubt if he does and am content to assume that there is no contract. Nevertheless, the terms which govern the obligations of the doctor on the one hand, as to the services he is to provide, and of the family practitioner committee on the other hand, as to the payments which it is required to make to the doctor, are all prescribed in the relevant legislation and it seems to me that the statutory terms are just as effective as they would be if they were contractual to confer upon the doctor an enforceable right in private law to receive the remuneration to which the terms entitle him. It must follow, in my view, that in any case of dispute the doctor is entitled to claim and recover in an action commenced by writ the amount of remuneration which he is able to prove as being due to him. Whatever remuneration he is entitled to under the statement is remuneration he has duly earned by the services he has rendered. The circumstance that the quantum of that remuneration, in the case of a particular dispute, is affected by a discretionary decision made by the committee cannot deny the doctor
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The Structure of the Common Law his private law right of recovery or subjecthim to the constraints which the necessity to seek judicial review would impose upon that right… Lord Lowry:… An important point is that the court clearly has jurisdiction to entertain the doctor’s action… It is concerned with a private law right, it involves a question which could in some circumstances give rise to a dispute of fact and one object of the plaintiff is to obtain an order for the payment (not by way of damages) of an ascertained or ascertainable sum of money. If it is wrong to allow such a claim to be litigated by action, what is to be said of other disputed claims for remuneration? I think it is right to consider the whole spectrum of claims which a doctor might make against the committee. The existence of any dispute as to entitlement means that he will be alleging a breach of his private law rights through a failure by the committee to perform their public duty. If the committee’s argument prevails, the doctor must in all these cases go by judicial review, even when the facts are not clear. I scarcely think that this can be the right answer… Although he seeks to enforce performance of a public law duty…his private law rights dominate the proceedings… Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696 House of Lords (See p 593.) Staffordshire Area Health Authority v South Staffordshire Waterworks [1978] 1WLR 1387 Court of Appeal (Seep 595.)
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‘English law has conspicuously failed to develop any general theory of public contracts… Even with individual departmental engagements the following may not be clear: whether the arrangement is contractual at all; whether certain obligations expressed in it bind the State; or whether (as in the case of transactions between private citizens) interpretation of the arrangement leads to the conclusion that it could have been, but in the event was not, a contract… The result of this…is that one of the commonest of everyday events [posting a letter], on which many people rely constantly, is entirely within the realm of non-law’ (Rudden, The domain of contract’, in Harris and Tallon (eds), Contract Law Today: Anglo-French Comparisons, 1989, OUP, pp 95, 96, 97). A postman carelessly loses letters: can he be sued for the loss? Will his employer be liable? What if he deliberately destroys letters? ‘Contracts between private persons are not concluded in a preserve of unrestricted self-interest, and therefore even the ordinary civil law of contract of any country necessarily includes rules which reflect a public interest in the objects and terms of private contracts. The element of the public interest is, however, significantly more prominent in the sphere ofpublic contracting’ (Turpin, ‘Public contracts’, IECL, Vol VII, Chapter 4, 89
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para 52). Is a local authority entitled to refuse to contract with anyone it does not like? (Cf R v Lewisham LBC ex p Shell (UK) [1988] 1 All ER 938; Blackpool and Fylde Aero Club Ltd v Blackpool BC, p 436.) The Cour de cassation, in consistent case law since 1876, has always forbidden judges to annul or revise contracts for imprévision, whatever the consequences might be… Contradicting the thesis upheld by the Cour de cassation, the Conseil d’Etat has elaborated since 1916 a theory of imprévision in administrative contracts… The interests of the public service require that this extra-contractual situation should not release the contracting party from his obligation. By way of compensation, the government has come to his help and take its share of the additional costs due to the imprévision… The basis for revision is precisely that the interests of a contracting party will be seriously prejudiced. It is a question of protecting an individual interest… This can thus be called protective public policy” (de Lamberterie, The effect of changes in circumstances’, in Harris and Tallon (eds), Contract Law Today: Anglo-French Comparisons, 1989, OUP, pp 228, 231, 233–34). Is the Staffordshire case authority for the proposition that inflation can frustrate an English contract? Does English law distinguish between change of circumstances (cf PECL, Art 6:111) and intervening event (cf PECL, Art 8:108)? Is an action for debt for services rendered founded on contract (law) or the actual rendering of the services (fact)? Are all debts private law rights?
(c) Administrative liability in tort Hill v Chief Constable of West Yorkshire [1989] AC 53 House of Lords This was an action for damages brought against the police by the estate of the last victim of the notorious ‘Yorkshire Ripper’ (Peter Sutcliffe). The writ alleged negligence on behalf of the police in failing to apprehend the murderer and thus leaving him free to murder the last victim. The judge ordered that the claim be struck out on the ground that it disclosed no cause of action. An appeal against this decision was dismissed by the Court of Appeal and House of Lords. Lord Keith:… There is no question that a police officer, like anyone else, may be liable in tort to a person who is injured as a direct result of his acts or omissions. So he may be liable in damages for assault, unlawful arrest, wrongful imprisonment and malicious prosecution, and also for negligence. Instances where liability for negligence has been established are Knightley v Johns [1982] 1 WLR 349 and Rigby v Chief Constable of Northamptonshire [1985] 1 WLR 1242. Further, a police officer may be guilty of a criminal offence if he wilfully fails to perform a duty which he is bound to perform by common law or by statute: see R v Dytham [1979] QB 722, where a constable was convicted of wilful neglect of duty because, being present at the scene of a
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The Structure of the Common Law violent assault resulting in the death of the victim, he had taken no steps to intervene. By common law police officers owe to the general public a duty to enforce the criminal law: see R v Commissioner of Police of the Metropolis ex p Blackburn [1968] 2 QB 118. That duty may be enforced by mandamus, at the instance of one having title to sue. But as that case shows, a chief officer of police has a wide discretion as to the manner in which the duty is discharged. It is for him to decide how available resources should be deployed, whether particular lines of inquiry should or should not be followed and even whether or not certain crimes should be prosecuted. It is only if his decision upon such matters is such as no reasonable chief officer of police would arrive at that someone with an interest to do so may be in a position to have recourse to judicial review. So the common law, while laying upon chief officers of police an obligation to enforce the law, makes no specific requirements as to the manner in which the obligation is to be discharged. That is not a situation where there can readily be inferred an intention of the common law to create a duty towards individual members of the public… … [I]n my opinion there is another reason why an action for damages in negligence should not lie against the police in circumstances such as those of the present case, and that is public policy… Potential existence of such liability may in many instances be in the general public interest, as tending towards the observance of a higher standard of care in the carrying on of various different types of activity. I do not, however, consider that this can be said of police activities. The general sense of public duty which motivates police forces is unlikely to be appreciably reinforced by the imposition of such liability so far as concerns their function in the investigation and suppression of crime. From time to time they make mistakes in the exercise of that function, but it is not to be doubted that they apply their best endeavours to the performance of it. In some instances the imposition of liability may lead to the exercise of a function being carried on in a detrimentally defensive frame of mind. The possibility of this happening in relation to the investigative operations of the police cannot be excluded. Further it would be reasonable to expect that if potential liability were to be imposed it would be not uncommon for actions to be raised against police forces on the ground that they had failed to catch some criminal as soon as they might have done, with the result that he went on to commit further crimes. While some such actions might involve allegations of a simple and straightforward type of failure— for example, that a police officer negligently tripped and fell while pursuing a burglar—others would be likely to enter deeply into the general nature of a police investigation, as indeed the present action would seek to do. The manner of conduct of such an investigation must necessarily involve a variety of decisions to be made on matters of policy and discretion, for example as to which particular line of inquiry is most advantageously to be pursued and what is the most advantageous way to deploy the available resources. Many such decisions would not be regarded by the courts as appropriate to be called in question, yet elaborate investigation of the facts might be necessary to ascertain whether or not this was so. A great deal of police time, trouble and expense might be expected to have to be put into the preparation of the defence to the action and the attendance of witnesses at the trial. The result would be a significant diversion of police manpower and attention from their
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Sourcebook on Obligations and Remedies most important function, that of the suppression of crime. Closed investigations would require to be reopened and retraversed, not with the object of bringing any criminal to justice but to ascertain whether or not they had been competently conducted. I therefore consider that Glidewell LJ, in his judgment in the Court of Appeal [1988] QB 60, p 76, in the present case, was right to take the view that the police were immune from an action of this kind on grounds similar to those which in Rondel v Worsley [1969] 1 AC 191 were held to render a barrister immune from actions for negligence in his conduct of proceedings in court. My Lords, for these reasons I would dismiss the appeal. Lord Templeman: My Lords, the appellant, Mrs Hill, is tormented with the unshakeable belief that her daughter would be alive today if the respondent, the West Yorkshire police force, had been more efficient. That belief is entitled to respect and understanding. Damages cannot compensate for the brutal extinction of a young life and Mrs Hill proposes that any damages awarded shall be devoted to an appropriate charity. Damages awarded by the court would not be paid by any policeman found wanting in the performance of his duty but would be paid by the public. Mrs Hill therefore brings these proceedings with the object of obtaining an investigation into the conduct of the West Yorkshire police force so that lives shall not be lost in the future by avoidable delay in the identification and arrest of a murderer. The question for determination in this appeal is whether an action for damages is an appropriate vehicle for investigating the efficiency of a police force. The present action will be confined to narrow albeit perplexing questions, for example, whether, discounting hindsight, it should have been obvious to a senior police officer that Sutcliffe was a prime suspect, whether a senior police officer should not have been deceived by an evil hoaxer, whether an officer interviewing Sutcliffe should have been better briefed, and whether a report on Sutcliffe should have been given greater attention. The court would have to consider the conduct of each police officer, to decide whether the policeman failed to attain the standard of care of a hypothetical average policeman. The court would have to decide whether an inspector is to be condemned for failing to display the acumen of Sherlock Holmes and whether a constable is to be condemned for being as obtuse as Dr Watson. The plaintiff will presumably seek evidence, for what it is worth, from retired police inspectors, who would be asked whether they would have been misled by the hoaxer, and whether they would have identified Sutcliffe at an earlier stage. At the end of the day the court might or might not find that there had been negligence by one or more members of the police force. But that finding would not help anybody or punish anybody. It may be, and we all hope that the lessons of the Yorkshire Ripper case have been learned, that the methods of handling information and handling the press have been improved, and that co-operation between different police forces is now more highly organised. The present action would not serve any useful purpose in that regard. The present action could not consider whether the training of the West Yorkshire police force is sufficiently thorough, whether the selection of candidates for appointment or promotion is defective, whether rates of pay are sufficient to attract recruits of the required calibre,
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The Structure of the Common Law whether financial restrictions prevent the provision of modern equipment and facilities, or whether the Yorkshire police force is clever enough and if not, what can and ought to be done about it. The present action could only investigate whether an individual member of the police force conscientiously carrying out his duty was negligent when he was bemused by contradictory information or overlooked significant information or failed to draw inferences which later appeared to be obvious. That kind of investigation would not achieve the object which Mrs Hill desires. The efficiency of a police force can only be investigated by an inquiry instituted by the national or local authorities which are responsible to the electorate for that efficiency. Moreover, if this action lies, every citizen will be able to require the court to investigate the performance of every policeman. If the policeman concentrates on one crime, he may be accused of neglecting others. If the policeman does not arrest on suspicion a suspect with previous convictions, the police force may be held liable for subsequent crimes. The threat of litigation against a police force would not make a policeman more efficient. The necessity for defending proceedings, successfully or unsuccessfully, would distract the policeman from his duties. This action is in my opinion misconceived and will do more harm than good. A policeman is a servant of the public and is liable to be dismissed for incompetence. A police force serves the public and the elected representatives of the public must ensure that the public get the police force they deserve. It may be that the West Yorkshire police force was in 1980 in some respects better and in some respects worse than the public deserve. An action for damages for alleged acts of negligence by individual police officers in 1980 could not determine whether and in what respects the West Yorkshire police force can be improved in 1988. I would dismiss the appeal. Elguzouli-Daf v Commissioner of Police of the Metropolis [1995] QB 335 Court of Appeal This was an unsuccessful claim for damages brought against the Crown Prosecution Service by two men who had been arrested for two quite different serious crimes. The CPS discontinued proceedings against them, but not before the two men had been held in prison for 22 and 85 days respectively. The men claimed that had the CPS not been negligent in respect of investigating the evidence against them, they would not have been detained for such long periods. Steyn LJ: These appeals raise the question of law whether the Crown Prosecution Service (“the CPS’) owes a duty of care to those it is prosecuting. We are asked to consider this question in the context of an order made on 8 October 1993 by Mr Patrick Bennett QC, sitting as a deputy High Court judge in the Queen’s Bench Division, striking out statements of claim in two actions brought by the plaintiffs against the CPS. In both actions the plaintiffs alleged that the CPS caused a prolongation of their detention by negligence. The judge ruled that under RSC Ord 18 r 19(1)(a) there was no sustainable cause of action in either case against the CPS… The general approach Leaving aside the first instance decision in Welsh v Chief Constable of the 93
Sourcebook on Obligations and Remedies Merseyside Police [1993] 1 All ER 692, to which I will turn in due course, the question before us is a novel one. The authority of a series of decisions in the House of Lords, and notably Caparo Industries plc v Dickman [1990] 2 AC 605, require us to consider the critical question not from the point of view of high principle but pragmatically and by analogy with established categories of liability. And in so approaching the question we must consider the ultimate question from three perspectives, namely (a) the foreseeability of the harm that ensues, (b) the nature of the relationship between the parties, usually called the element of proximity, and (c) the question whether it is fair, just and reasonable that the law should impose a duty of care… The general approach enunciated in the House of Lords cases such as the Caparo case [1990] 2 AC 605 must take into account the public nature of the functions of the CPS The CPS acts for the public as a whole. It acts in the public interest. In applying the twofold test whether there is a sufficiency of evidence to warrant a prosecution and whether the prosecution is in the public interest, the prosecutor has a role independent of the interests of the government of the day. It is a matter for examination whether this public role requires the CPS to be treated differently in the law of tort from private citizens and corporations. The backcloth of other protections and remedies The need for, or desirability of, a duty of care owed by the CPS to those it is prosecuting must be considered in the context of other protections and remedies offered by the principles on which our democracy is founded. First, by convention the Attorney General is answerable to Parliament for general prosecution policy and for specific cases where the Attorney General or the Director of Public Prosecutions intervenes. The sanction is an adverse vote in Parliament on the conduct of the Attorney General, which could make his position untenable. But, in the nature of things, Parliament can usually only call the Attorney General to account after a prosecution has run its course. And Parliament will not give directions to the Attorney General. That is cold comfort for a citizen who suffered as a result of maladministration. On the other hand the Attorney General’s accountability to Parliament is a brake on maladministration. Secondly, there is the possibility of judicial review of decisions by the CPS. Given the nature of the prosecution process it is, however, right to say that the scope for such judicial review proceedings is very limited indeed: Wiseman v Borneman [1971] AC 297, p 308; Nicol v Attorney General for the State of Victoria [1982] VR 353; Dickens, The Attorney General’s consent to prosecutions’ (1972) 35 MLR 347. Turning to private law remedies there is first of all the tort of malicious prosecution. In order to succeed in such an action the plaintiff must prove that the prosecution failed, that there was no reasonable or probable cause for the prosecution and that the defendant was actuated by malice. It is also necessary to consider the tort of misfeasance in public office. The essence of the tort is the abuse of public office. Potentially such liability might attach to a decision of a CPS prosecutor. But, as the law stands, the plaintiff has to establish either that the holder of the public office maliciously acted to the plaintiffs detriment or that he acted knowing that he did not possess the relevant power. That is the effect of the decision of the Court of Appeal in Bourgoin SA v Ministry of Agriculture, Fisheries and Food [1986] QB 716. In this corner of the law our legal system
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The Structure of the Common Law possibly has a capacity for further development, notably under the direct or indirect influence of the jurisprudence of the European Court of Justice: see Fmncovich v Republic of Italy (Joined Cases C-6/90 and C-9/90) [1995] ICR 722 and Kirklees Metropolitan Borough Council v Wickes Building Supplies Ltd [1993] AC 227, pp 281–82, per Lord Goff of Chieveley. But it would be wrong to say more in this case about this complex area of the law. By way of summary, one can say that as the law stands a citizen, who is aggrieved by a prosecutor’s decision, has in our system potentially extensive private law remedies for a deliberate abuse of power. That still leaves open the question whether the CPS should also be held to owe a common law duty of care to those it is engaged in prosecuting. The police immunity The analogy of Hill v Chief Constable of West Yorkshire [1989] AC 53 is instructive. The issue was whether a claim against the police for negligent failure to apprehend a violent criminal was sustainable. The claim failed at all levels of the judicial hierarchy. The House of Lords held that there was no general duty of care owed by the police to individual members of the public to identify and apprehend a criminal. But the House of Lords further held, as a second and separate ground of decision, that as a matter of public policy the police were immune from actions of negligence in respect of their activities in the investigation and suppression of crime… Putting the decision in Hill’s case [1989] AC 53 in perspective, I would only add that it does not follow that the police may not be held liable in a case where there is some form of assumption of responsibility by the police. But for present purposes the significance of Hill’s case is that, while the prime function of the police is the investigation of crime, the CPS as part and parcel of its prosecuting function needs to investigate and prepare cases. Indeed, the complaints in the present cases assert negligence by the CPS in preparing the prosecution cases. The reasoning in Hill’s case militates by way of analogy against recognising a duty of care in the case of the CPS. Indeed, in some ways it could be said that the argument against a duty of care, and for immunity, is even stronger in the present case since much of police work is operational whereas the function of the CPS involves to a large extent matters of judgment and discretion… That brings me to the policy factors which, in my view, argue against the recognition of a duty of care owed by the CPS to those it prosecutes. While it is always tempting to yield to an argument based on the protection of civil liberties, I have come to the conclusion that the interests of the whole community are better served by not imposing a duty of care on the CPS. In my view, such a duty of care would tend to have an inhibiting effect on the discharge by the CPS of its central function of prosecuting crime. It would in some cases lead to a defensive approach by prosecutors to their multifarious duties. It would introduce a risk that prosecutors would act so as to protect themselves from claims of negligence. The CPS would have to spend valuable time and use scarce resources in order to prevent law suits in negligence against the CPS. It would generate a great deal of paper to guard against the risks of law suits. The time and energy of CPS lawyers would be diverted from concentrating on their prime function of prosecuting offenders. That would be likely to happen not only during the prosecution
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Sourcebook on Obligations and Remedies process but also when the CPS is sued in negligence by aggrieved defendants. The CPS would be constantly enmeshed in an avalanche of interlocutory civil proceedings and civil trials. That is a spectre that would bode ill for the efficiency of the CPS and the quality of our criminal justice system. Conclusion While Mr Richards, who appeared for the CPS, disputed that even the element of foreseeability of harm is established, I would be prepared to accept that the plaintiffs can satisfy this requirement. For my part the matter turns on a combination of the element of proximity and the question of whether it is fair, just and reasonable that the law should impose a duty of care. It does not seem to me that these considerations can sensibly be considered separately in this case: inevitably they shade into each other. Recognising that individualised justice to private individuals, or trading companies, who are aggrieved by careless decisions of CPS lawyers, militates in favour of the recognition of a duty of care, I conclude that there are compelling considerations, rooted in the welfare of the whole community, which outweigh the dictates of individualised justice. I would rule that there is no duty of care owed by the CPS to those it prosecutes… Finally, if I had answered the substantive question in favour of the plaintiffs, I would have wanted to hear argument on the question whether the CPS is in law vicariously liable for the acts of the CPS prosecutors. Having regard to the duties imposed on prosecutors by statute and common law, the CPS might not have been so liable: see Field v Nott (1939) 62 CLR 660, p 675, per Dixon J. In the result, this question falls away. Morritt LJ:… I do not think that the imposition of either of the duties contended for is required by the relationship between the CPS and the plaintiffs or that it would be fair, just and reasonable for the law to do so. There are a number of reasons why I reach that conclusion. None of them may be sufficient in itself but the overall combination is in my judgment compelling. First, there is the analogy with civil litigation. One party to a civil action does not owe a duty of care to the other, nor does his solicitor: Business Computers International Ltd v Registrar of Companies [1988] Ch 229; Al-Kandari v JR Brown Co [1988] QB 665. The reason is obvious: the duty to the other side might conflict with the duty to his own client. The analogy is not precise because criminal proceedings and the role of the prosecutor are different from civil proceedings and the role of a plaintiff in them. But the respects in which the roles differ appear to me to suggest that the prosecutor is an a fortiori case. Some of his duties and in particular where they differ from those of a plaintiff are equated with those of a minister of justice. In that respect a liability in negligence would be even more inapposite than in the case of the opposing party or his solicitor in civil ligitation. Secondly, not only would it be surprising to find a common law duty in the circumstance that the CPS is a recent creature of statute but under no statutory duty to individuals, but it would suggest that in this field at least the
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The Structure of the Common Law independent torts of malicious prosecution and misfeasance in a public office are unnecessary. In the case of the former a plaintiff has to establish the absence of reasonable and probable cause and malice. In the case of the latter knowledge of the want of power is an essential element. If the plaintiffs are right want of reasonable care will suffice. To conclude that the duties for which the plaintiffs contend do exist would be to disregard the danger to which Lord Templeman referred in Downsview Nominees Ltd v First City Corporation Ltd [1993] AC 295, p 316, namely: …of extending the ambit of negligence so as to supplant or supplement other torts, contractual obligations, statutory duties or equitable rules in relation to every kind of damage including economic loss… I do not understand that warning to have lost its relevance by virtue of the decision of the House of Lords in Spring v Guardian Assurance plc [1995] 2 AC 296…
Notes and questions 1
2
3
French law distinguishes between civil liability (private law) and administrative liability (public law): each is governed by a different set of courts with its own case law. In English law all legal and natural persons, public and private, are governed by the same tort regime with the result that tort, in addition to its compensatory role, has an important constitutional function. It is the tort of trespass that provides the remedy for wrongful arrest. Malicious prosecution (see p 699) and misfeasance in public office are other important constitutional torts. However, the police or other government officials can, in turn, use the law of tort against citizens who make a nuisance of themselves. The tort of defamation has proved a useful weapon to wield against those who complain or comment upon the activities of government officials (see, for example, Mapp v News Group Newspapers [1998] QB 520). Is this healthy? Ought politicians to be able to sue those who criticise their abilities or their outside interests? In one response to this kind of question a Law Lord has stated: ‘It is of the highest public importance that a democratically elected governmental body, or indeed any governmental body, should be open to uninhibited public criticism. The threat of a civil action for defamation must inevitably have an inhibiting effect on freedom of speech’ (Lord Keith in Derbyshire CC v Times Newspapers [1993] AC 534, p 547). What might be the effect of this judicial statement on the right of a policeman to sue a newspaper or complaining citizen in defamation? Read Ministry of Housing v Sharp [1970] 2 QB 223 in the law report. Is it really sensible that central government is here encouraged to sue local government because of an error made by an employee who is in effect a civil servant? Is the public interest being served?
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4 5
6
In what circumstances should the State compensate citizens for damage arising through non-negligent government action? (Cf Rigby, below.) Do you not find it disturbing that an innocent person can be held for three months in prison without any legal redress? Is this not a breach of the European Convention on Human Rights in UK law? Can one have faith in the English judiciary when it comes to upholding human rights? What might be the effect of the Human Rights Act 1998 on cases like Hill and Elguzouli-Daf when it finally comes into force? Would it surprise you to learn that one plaintiff in Elguzouli-Daf was a political refugee from Sudan while the other was a resident of Northern Ireland? Rigby v Chief Constable of Northamptonshire [1985] 1 WLR 1242 Queen’s Bench Division Taylor J: On 17 December 1977, the Sportsman’s Lodge, a gunsmiths shop in Northampton owned by the first plaintiff, Michael Rigby, was burned out. The cause of the fire was most unusual. A young psychopath had broken into the premises and armed himself. The police laid siege to the shop. Eventually they fired in a canister of CS gas to smoke out the intruder. The canister set the shop ablaze. The first plaintiff now sues the Chief Constable of Northamptonshire for damages for loss and damage to the premises and contents. The second plaintiff makes a small claim for damage to his guns which were in the first plaintiff’s custody in the shop. The case is put in a variety of ways; in trespass, in nuisance, in Rylands v Fletcher (1868) LR 3 HL 330 and in negligence. The defendant denies liability and raises, by way of specific defences, implied consent, necessity and contributory negligence of the first plaintiff… I now turn to consider the several…heads under which the plaintiffs’ claim is advanced. First, trespass or nuisance. Mr O’Brien concedes that the allegation of nuisance adds nothing to his claim in trespass. Mr Machin puts it more strongly. He contends that since the firing of the canister causing the damage was a direct rather than an indirect act, trespass rather than nuisance would be the appropriate cause of action. Either way, I do not need to consider nuisance any further. It is common ground that to project an article such as the canister on to another’s land from outside would, without justification or lawful excuse, constitute trespass. Mr Machin, however, puts the defence on three separate footings: first, implied consent; secondly, the necessary and proper exercise of police powers; and thirdly, the general defence of necessity. As to implied consent, Mr Machin contends that the first plaintiff’s evidence supports this defence. He said in cross-examination that he was prepared to leave things to the police to use their judgment from their experience. He gave the shop keys to the police. He had no objection to their going into the premises if they thought it right. Had they asked him if he minded their firing a CS canister into the shop he would have agreed with it. He added,
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The Structure of the Common Law however,that had he known the firing of a canister involved a fire risk he would have asked the police to make sure that there was a fire appliance immediately available. I am somewhat doubtful whether this evidence given seven years after the event, as to what the first plaintiff would have said had he been asked, is a sound footing for a defence of implied consent. In any event, I accept Mr O’Brien’s contention that any implied consent would be limited to permitting the police to do what was necessary and no more. I therefore think that this head of defence merges with or is co-extensive with the defence of necessity… There is a surprising dearth of authority as to the nature and limits of necessity as a defence in tort. Mr Machin referred me to three cases. Cope v Sharpe (No 2) [1912] 1 KB 496 was a case of alleged trespass where the defendant had sought to prevent a heather fire from spreading. Creswell v Sirl [1948] 1 KB 241 was a case of alleged trespass to a dog which the defendant had shot to prevent it worrying sheep. In each case the defence prevailed. Esso Petroleum Co Ltd v Southport Corp n[1956] AC 218 is the leading case on the topic and both counsel referred to it in detail. It concerned an oil tanker stranded in a river estuary. Her master jettisoned 400 tons of oil cargo to prevent the tanker breaking her back. The tide carried the oil slick on to a fore-shore causing damage. The foreshore owners sued the ship owners in trespass, nuisance and negligence. However, the only negligence alleged on the pleadings was faulty navigation by the master for which it was said the owners were vicariously liable. The owners’ case was that the stranding was due to faulty steering gear caused by a crack in the stern frame. The defence of necessity was raised, inter alia, and Devlin J upheld it [1953] 3 WLR 773. The Court of Appeal reversed Devlin J’s judgment [1954] 2 QB 182 but it was restored by the House of Lords… The case is therefore clear authority for the application of necessity as a defence to trespass especially where human life is at stake. However, Mr O’Brien relies on dicta in their Lordships’ speeches to support the proposition that the defence is not available if the necessity is brought about by the defendant’s own negligence, and that the burden of negativing negligence lies upon the defendant once the issue has been raised. The Court of Appeal took the view that the defendants had failed to discharge the burden of showing that the cracked frame causing a defect in the steering gear was not due to their negligence. Mr O’Brien says the House of Lords restored Devlin J’s judgment solely on pleading grounds. There had been no allegation of negligence against the ship owners except in relation to the master’s handling of the vessel. Mr O’Brien’s two propositions are clearly right. Necessity is not a good defence if the need to act is brought about by negligence on the part of the defendant. Once that issue is raised the defendant must show on the whole of the evidence that the necessity arose without negligence on his part. The more difficult question is as to what is meant by ‘negligence’ in this context… From these passages, Mr O’Brien argues that in the present case, where the issue has been raised, unless the defendant can show that to have equipped himself with Ferret would not have been a reasonable precaution, he fails to discharge the onus of proof. Necessity would therefore not avail him. I have already indicated that in my judgment the defendant was not negligent
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Sourcebook on Obligations and Remedies in exercising his discretion not to purchase Ferret. However, Mr O’Brien argues that, notwithstanding that, if the purchase of Ferret would have been a reasonable or a not unreasonable precaution then the necessity to use the CS canister would have been brought about by fault on the part of the defendant. I cannot accept this argument. The passages cited…were both in the context of a defence of inevitable accident as raised in The Merchant Prince [1892] P 179, upon which, as Lord Radcliffe said, much of the argument in Esso Petroleum Co Ltd v Southport Corpn [1956] AC 218 turned. I do not think that the observations of Lord Normand and Lord Radcliffe, which were obiter in any event, were intended to lay down a higher duty than the duty in the tort of negligence as a condition precedent to the application of the defence of necessity. It would be most unfair to do so. Whether or not the defendant has been negligent prior to the occurrence of the alleged necessity must surely be viewed as at the time of the alleged negligence. If by the ordinary criteria of negligence the defendant can show that at that time he was not at fault, it cannot be just when the necessity arises to impose retrospectively a higher duty on the defendant. Nor do I think Southport Corporation’s case is authority for that proposition. I am reinforced in this view by statements in two of the leading text books on the law of tort… I therefore hold that a defence of necessity is available in the absence of negligence on the part of the defendant creating or contributing to the necessity. In this case there was a dangerous armed psychopath whom it was urgently necessary to arrest. I have already found that it was not negligent of the defendant to be without Ferret. It is conceded that the only alternative was to fire in a CS gas canister, which was done. I therefore find that the defence of necessity prevails and that the cause of action in trespass fails. Next, Rylands v Fletcher (1868) LR 3 HL 330. Mr O’Brien contends that this was an escape, albeit intentional, of a dangerous thing under the defendant’s control on to the first plaintiff’s property and that strict liability must attach. In answer, Mr Machin makes three submissions. First, he says, the Rylands v Fletcher principle only applies where there is an escape of a dangerous thing from land owned or occupied by the defendant at least under a franchise. A defendant who projects a missile on to the plaintiff’s land from the highway has no sufficient interest in the land whence the missile escapes. He cited West v Bristol Tramways Co [1908] 2 KB 14 (escape of creosote fumes from wood blocks which the defendant had built into the highway) and Powell v Fall (1880) 5 QBD 597 (sparks from the highway). In neither of those cases was the point taken as to the sufficiency of the defendant’s occupancy of the land. In Jones v Ffestiniog Railway Co (1868) LR 3 QB 733 (escape of sparks from the railway), the defendants were at least occupiers and managers of the railway track. I am unconvinced by this argument… I can see no difference in principle between allowing a man-eating tiger to escape from your land on to that of another and allowing it to escape from the back of your wagon parked on the highway. Secondly, and more fundamentally, Mr Machin says that Rylands v Fletcher does not apply to an intentional or voluntary release of a dangerous thing. The essence of the principle, he says, is an escape which predicates that 100
The Structure of the Common Law there is no intentional or voluntary release. If the defendant deliberately releases or discharges the dangerous thing, then the right cause of action is trespass. Rylands v Fletcher, he says, derives from an action on the case for indirect damage. Mr Machin relies on a dictum of Viscount Simon in Read v J Lyons and Co Ltd [1947] AC 156, p 166: The circumstances in Fletcher v Rylands (1865) LR 1 Ex 265 did not constitute a case of trespass because the damage was consequential, not direct.’ Mr O’Brien concedes that he can find no reported case of the principle being applied to an intentional release or firing of a dangerous thing. But, in principle, he argues that if the strict liability attaches in respect of an escaping tiger, the duty can be no lower in the case of a deliberately released tiger. The defendant’s duty, he says, is to keep the tiger in at his peril. That makes sense but begs the question as to whether the liability for deliberate release is in trespass or Rylands v Fletcher. I am inclined to the view that Mr Machin is right on this point. In any event, however, the issue on this cause of action is clinched by Mr Machin’s third point, which is again the defence of necessity. In the classic and it may be the only Rylands v Fletcher situation, where there is an involuntary escape, the defence of necessity would be inappropriate. Since the defendant ex hypothesi would not have made any decision or choice whether to release the dangerous thing, he could hardly rely on necessity at that stage. He could at most rely upon the necessity of bringing the dangerous thing to the point whence it escaped. However, if one is to embrace cases of voluntary release or firing (such as this one) within the Rylands v Fletcher principle, it seems irresistibly logical that the defence of necessity must be open on the same basis as in trespass. Mr O’Brien, whilst accepting that necessity can apply to Rylands v Fletcher liability, sought to argue that it has a more limited scope there than in answer to alleged trespass. He based this on the decision in West v Bristol Tramways Co [1908] 2 KB 14, the creosote case. However, there the defence was statutory authority and I do not think Mr O’Brien made his submission good. In the result, I conclude that if, which I doubt, this case falls to be considered at all under Rylands v Fletcher, necessity would provide a good defence as it does in trespass. This leads me to consider the remaining allegation of negligence. I have already ruled that there was no negligence in being without the Ferret and in relying upon the CS canister. However, the plaintiffs allege, and have done since their action was brought, a number of heads of negligence in connection with the defendant’s use of the canister or cartridge. These narrowed down in the end to allegation (v): ‘Firing the said cartridge when the fire brigade was not in attendance.’ It is conceded that the defendant must be fixed with knowledge of the Green Goddess’s departure. From 8.35 pm, therefore, the defendant had constructive knowledge that there was no fire-fighting equipment standing by should it be necessary to use CS gas. The canister was not fired until 9.20 pm. Although I consider Mr Greenwood overstated the fire risk, I am satisfied that it was a very real and substantial one, acceptable only if there was equipment readily available to put out any fire at an early stage. This would be so, in my 101
Sourcebook on Obligations and Remedies judgment, even excluding the possibility of any accelerant happening to be present. Chief Inspector McGhee’s first reaction, as one trained in the use and risks of the CS canister, was to have the fire brigade called to stand by even before he set out for the scene from the police station. I bear in mind the pressures and burdens upon the officers in the fraught situation with which they were dealing. Mr Machin argues that they could not have prevented the Green Goddess going to an existing fire elsewhere, that there is no evidence that another fire appliance could have been got to the scene in time, and that at 9.20 it would have been necessary to fire the canister even if Chief Inspector McGhee had known of the Green Goddess’s departure. On the other hand, had the police acted immediately at 8.35, Mr O’Brien argues the probability is that a fire appliance (for example, the Wellingborough Green Goddess which in fact came later) could have been brought to the scene and would have arrived before 9.20. Bearing all these matters in mind, I conclude that the defendant by his officers was negligent in failing to react to the departure of the Green Goddess by seeking other help, and in using the canister without any fire-fighting equipment. Mr Machin then says the burden remains on the plaintiffs to show that the damage would have been appreciably less if there had been a fire appliance nearby. The Green Goddess had been 80 to 100 yards away, agreed to be a proper distance. By the time it could be brought up in safety and deployed, the fire, accelerated by the presence of the powder, would inevitably have done as much damage as was in fact done. This argument, it seems to me, might have been of more substance if the shop had been totally razed to the ground. It was not, as can be seen on the photographs. True, there was no evidence from the plaintiffs’ side to establish by expert opinion that less damage would have resulted had the fire been fought quicker and how much less. But it seems to me inevitable that some reduction in the damage would have been effected by quicker deployment of pumps. Part of the shop, in fact, remained unconsumed; appreciably more of it would have done so. I therefore find that the negligence was causative of actionable damage. There remains the allegation of contributory negligence. This is based upon the Eley smokeless powder which Porter-Harris emptied on the floor. The first plaintiff said that all the tins of powder were locked in a safe in the back shop or should have been. He conceded that as it had been a busy Saturday, by human error they could have been left out on a shelf (as indeed he had said they were in his original statement). If the tins had been locked away, Porter-Harris could not have had ready access to them; powder would therefore not have been spilt on the floor. It may be that no fire would have been started by the canister, or at any rate such fire as did start would have been less dramatic and damaging. I bear in mind that the first plaintiff had a number of security devices which were correctly put into operation. There was the alarm system to the police station; there was armoured window glass; the door was heavily locked; there were grills on the outside of some windows and bars on the windows at the rear. Most of the weapons were in racks with security chains. In these circumstances I do not consider that leaving tins of powder on shelving in the back shop constituted contributory negligence.
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I am not asked to consider the issue of damages. Suffice it to say, therefore, that in the upshot I find the defendant liable in negligence to both plaintiffs. The damages issue must be tried by another tribunal unless agreed.
Notes and questions 1
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Do you think the real plaintiff in this action was an insurance company subrogated (see p 268) to the shop owner’s rights? If not, could it not be said that the plaintiff deserved to lose the case for having an uninsured building? Might he have been insured, but the company had refused to pay? ‘The jurisprudential basis for liability without fault [in French administrative law] has often been said to be that of the “risk theory”. The activities of the State, even when conducted without fault, may in certain circumstances constitute the creation of a risk; if the risk materialises and an individual is occasioned injury or loss, it is only just that the State should indemnify him. An alternative and perhaps more profound rationale is to connect liability without fault to the fundamental principle of the equality of all citizens in bearing public burdens. This principle of “egalite devant les charges publiques”, which is founded in Art 13 of the Declaration of the Rights of Man, has been vividly expressed by Duguit: “the activity of the State is carried on in the interest of the entire community; the burden that it entails should not weigh more heavily on some than others…”’ (Neville, Brown and Bell, French Administrative Law, 4th edn, 1993, OUP, p 184). Does English law subscribe to the egalite principle? (Cf Dunne v NW Gas Board, p 189.) ‘France introduced a comprehensive system of workmen’s compensation in 1898 (a year after the English Workmen’s Compensation Act). But three years before…the Conseil d’Etat had anticipated this legislation...taking the view that the State owed an obligation to indemnify against the risks of employment (le risque professionnel) to those engaged in a public service. Even without statute, this principle has been used to give no-fault compensation to servicemen and women and their families for injuries on active service or in training… Subsequently the Conseil d’Etat extended this right to compensation to those assisting in the public service even in a voluntary capacity…’ (Neville, Brown and Bell, French Administrative Law, 4th edn, 1993, OUP, p 185). A government inspector is injured in a munitions factory by an unexplained explosion: can she recover damages in English law without proving fault? A fireman is injured while rushing to a fire: can he recover compensation or does he take the risk of such an injury? (Cf Read v J Lyons and Co, p 662; Watt v Hertfordshire CC [1954] 1 WLR 835.)
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Sourcebook on Obligations and Remedies X (Minors) v Bedfordshire County Council [1995] 2 AC 633 (See p 727.) Stovin v Wise [1996] AC 923 (See p 737.)
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Rigby concerned the police. But consider the position of local authorities: ‘From the point of view of the tort lawyer, local government is much more important than central government. Local government may decide less, but it does more, and tort liability attaches to people who do rather than to people who decide… The liability of central government may admittedly be impressive in amount… But generally, apart from the prisons and to a smaller extent the military, central government does not seem to be very vulnerable to tort suits. They do not occupy schools, though they seek increasingly to control them; and they do not mend the sidewalks, they only deny the ha’porth of tar required to mend them. Quite different is local government. Everyone sues them, even the Minister for Local Government himself…’ (Weir, ‘Governmental liability’ [1989] PL 40, 47–48). Can the owner of a yacht damaged by escaping prisoners sue the Home Office for damages? (Cf Home Office v Dorset Yacht Co, below, p 645.) There are, however, features of a local authority which may be regarded as distinguishing it from other types of corporation, whether trading or non-trading. The most important of these features is that it is a governmental body’ (Lord Keith, Derbyshire CC v Times Newspapers [1993] AC 534, p 547). How should this distinction affect the question of liability in tort?
(d) Restitution and public law Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70 House of Lords A building society paid several instalments of tax under regulations that it believed were void. In subsequent judicial review proceedings the regulations were finally declared void in a judgment by the House of Lords and the revenue repaid the money with interest from the date of the judgment. The building society brought an action in debt (money had and received) for interest from the date of payment. The trial judge refused the claim, but this was reversed by a majority of the Court of Appeal. A bare majority of the House of Lords dismissed an appeal. Lord Goff:… Take any tax or duty paid by the citizen pursuant to an unlawful demand. Common justice seems to require that tax to be repaid, unless special
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The Structure of the Common Law circumstances or some principle of policy require otherwise; prima facie, the taxpayer should be entitled to repayment as of right… I would…hold that money paid by a citizen to a public authority in the form of taxes or other levies paid pursuant to an ultra vires demand by the authority is prima facie recoverable by the citizen as of right… I do not consider that the principle of recovery should be inapplicable simply because the citizen has paid the money under a mistake of law. Lord Browne-Wilkinson:… Although there is in English law no general rule giving the plaintiff a right of recovery from a defendant who has been unjustly enriched at the plaintiffs expense, the concept of unjust enrichment lies at the heart of all the individual instances in which the law does give a right of recovery… In the present case, the concept of unjust enrichment suggests that the plaintiffs should have a remedy… If the revenue is right, it will be enriched by the interest on money to which it had no right during that period. In my judgment, this is the paradigm of a case of unjust enrichment… There is in my view a close analogy to the right to recover money paid under a contract the consideration for which has wholly failed… The money was demanded by the State from the citizen and the inequalities of the parties’ respective positions is manifest even in the case of a major financial institution like Woolwich. There are…sound reasons by way of analogy for establishing the law in the sense which Lord Goff proposes. Lord Slynn:… I do not consider that the fact that Parliament has legislated extensively in this area means that no principle of recovery at common law can or should at this stage of the development of the law be found to exist… Although as I see it the facts do not fit easily into the existing category of duress or of claims colore officii, they shade into them. There is a common element of pressure which by analogy can be said to justify a claim for repayment… I find it quite unacceptable in principle that the common law should have no remedy for a taxpayer who has paid large sums or any sum of money to the revenue when those sums have been demanded pursuant to an invalid regulation and retained free of interest pending a decision of the courts. Lord Keith (dissenting):… The principle to be derived from [the cases], in my opinion, is that payments not lawfully due cannot be recovered unless they were made as a result of some improper form of pressure… In the present case no pressure to pay was put upon Woolwich by the revenue. Woolwich paid because it calculated that it was in its commercial interest to do so. It could have resisted payment, and the revenue had no means other than the taking of legal proceedings which it might have used to enforce payment. The threat of legal proceedings is not improper pressure. There was no improper pressure…and…there was no duress. Lord Jauncey (dissenting):… Running through the authorities is the distinction between payments voluntary and payments made under compulsion or duress—the former being irrecoverable, the latter recoverable. 105
Sourcebook on Obligations and Remedies The difference in the various authorities lies in the determinations as to what constitutes compulsion or duress… Duress to be relevant must be found within the four walls of the transaction. In this case Woolwich would, in relation to the revenue, have been no worse off if they had refused payment of the tax claimed and raised the defence which subsequently proved successful… That is sufficient for the disposal of this appeal which I would allow albeit with no little regret. The revenue obtained a huge sum of money which they had no right to demand and they are now hanging on to a very large amount of interest which they have no moral right to retain… However… I do not consider that it would be appropriate for this House to make new law in this instance… For example…how long should any right to repayment last? Is it in the public interest that a public authority’s finances should be disrupted by wholly unexpected claims for repayment years after the money in question has been received? These are all matters…with which the legislature is best equipped to deal.
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Upon what principle was recovery allowed in this case? Is this case an example of the private (commercial) interest being given precedence over the public interest? Does Lord Slynn’s view conflict with the views expressed in Murphy v Brentwood DC [1991] AC 398 (see above, p 25)? Kleinwort Benson Ltd v Birmingham CC [1997] QB 380 Court of Appeal (See p 70.) Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1994] 1 WLR 938 Court of Appeal Leggatt LJ (Court of Appeal): The parties believed that they were making an interest swaps contract. They were not, because such a contract was ultra vires the council. So they made no contract at all. The council say that they should receive a windfall, because the purpose of the doctrine of ultra vires is to protect council taxpayers whereas restitution would disrupt the council’s finances. They also contend that it would countenance ‘unconsidered dealings with local authorities’. If that is the best that can be said for refusing restitution, the sooner it is enforced the better. Protection of council taxpayers from loss is to be distinguished from securing a windfall for them. The disruption of the council’s finances is the result of ill-considered financial dispositions by the council and its officers. It is not the policy of the law to require others to deal at their peril with local authorities, nor to require others to undertake their own inquiries about whether a local authority has power to make particular contracts or types of contract. Any system of law, and indeed any system of fair dealing, must be expected to ensure that the council do not profit by the fortuity that when it became known that the contract was
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The Structure of the Common Law ineffective the balance stood in their favour. In other words, in circumstances such as these they should not be unjustly enriched… (See, now, p 799.) Kleinwort Benson Ltd v Glasgow CC [1999] 1 AC 153 House of Lords (Seep 71.) Kleinwort Benson Ltd v Lincoln CC [1998] 3 WLR 1095 House of Lords (See p 823.)
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Are these causation cases? What if the contract had turned out to be illegal rather than void? Why should these interest swap cases not be seen in terms of risk rather than unjust enrichment? If such an approach were to be adopted, would the results be different? The courts seem very keen to protect the interests of the bank rather than those of the local authorities: does this contrast sharply with the attitude to be found in the X (Minors) (p 727) case? The Powstaniec Wielkopolski [1989] QB 279 Queen’s Bench Sheen J:… When construing an Act of Parliament it is to be presumed that Parliament intended to legislate in the public interest. My view as to what is in the public interest is based upon two factors, namely (1) that one of the reasons for awarding salvage is to encourage mariners to go voluntarily to the assistance of ships in distress, and it is in the public interest that they should be so encouraged…
Questions 1 2 3
Is the law of salvage part of public law or commercial law? Is commercial law part of public or private law? Is a master of ship under a legal duty to go to the aid of another ship in distress? (Cf Merchant Shipping Act 1995, s 93.)
8 THE ROLE OF TEXTBOOKS White v Jones [1993] 3 WLR 730 Court of Appeal; [1995] 2 AC 207 House of Lords (See p 702.) Steyn LJ (Court of Appeal):… The question decided in Ross v Caunters was a difficult one. It lies at the interface of what has traditionally been regarded as the separate domains of contract and tort. It is therefore not altogether surprising that the appeal in the present case lasted three days, and that we 107
Sourcebook on Obligations and Remedies were referred to about 40 decisions of English and foreign courts. Pages and pages were read from some of the judgments. But we were not referred to a single piece of academic writing on Ross v Caunters. Counsel are not to blame: traditionally counsel make very little use of academic materials other than standard textbooks. In a difficult case it is helpful to consider academic comment on the point. Often such writings examine the history of the problem, the framework into which a decision must fit, and countervailing policy considerations in greater depth than is usually possible in judgments prepared by judges who are faced with a remorseless treadmill of cases that cannot wait. And it is arguments that influence decisions rather than the reading of pages upon pages from judgments. I am not suggesting that to the already extremely lengthy appellate process there should be added the reading of lengthy passages from textbooks and articles. But such material, properly used, can sometimes help to give one a better insight into the substantive arguments. I acknowledge that in preparing this short judgment the arguments for and against the ruling in Ross v Caunters were clarified for me by academic writings… Lord Mustill (House of Lords) (dissenting):… My Lords, I have two final observations. The first concerns the marked contrast between the scores of authorities cited in argument, and the very few reported cases which I have called up. This may seem discouraging to those who with great skill and labour have gathered together and analysed all this diverse material. Such a feeling would be understandable but mistaken. The extensive citation has been indispensable as a means of placing before your Lordships the interplay of ideas so copiously developed by jurists here and abroad. The whole of the landscape has been exposed. Yet when it comes to reaching a decision and explaining the grounds for it there is a possibility of surfeit. The construction of an intelligible mosaic becomes impossible if there are too many pieces. Many of them will not fit. A full account of all the previous decisions would be endless and useless. Ultimately it is the broad shape of the principles which matters, and to obscure them in a fog of citation would not in my opinion advance the development of the law of negligence, so important to everyday life. Secondly, the judgment of Steyn LJ remarked on the sparseness of reference to academic writings in the argument before the Court of Appeal. No such complaint could be made of the proceedings in this House. There can be few branches of contemporary law on which the commentators have had so much to say. Citation has been copious, and of great value. If I refer to none of the writings it is only because, as with the reported cases, the volume is too large to permit accurate and economical exposition; and the selection of some in preference to others would be invidious. It is the practice in official law reports to record not only the cases referred to in the judgments, but also those brought forward in argument. This is an invaluable feature for those who follow behind. A similar record of the doctrinal materials brought forth in argument would, I believe, greatly help to place in perspective the views which your Lordships have expressed… Lord Goff:… Strongly though I support the study of comparative law, I hesitate to embark in an opinion such as this upon a comparison, however brief, with a civil law system; because experience has taught me how very
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The Structure of the Common Law difficult, and indeed potentially misleading, such an exercise can be. Exceptionally however, in the present case, thanks to material published in our language by distinguished comparatists, German as well as English, we have direct access to publications which should sufficiently dispel our ignorance of German law and so by comparison illuminate our understanding of our own…
Notes and questions 1
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‘Modern textbooks are important…as guides to the case law with which they are concerned. But if they are good they are more than mere guides, for they seek not only to arrange the cases systematically but to extract from them the general principles of the law and to show how those principles may be developed. And the same is true, on a smaller scale, of articles in the Law Reviews… To deny persuasive authority to textbooks today may be to state the formal position in England quite correctly, but it is to conceal the substantial and increasing importance of law doctrine in the formation of English law’ (Jolowicz, Lectures on Jurisprudence, 1963, Athlone, pp 314–15). Why do you think it is that doctrine is not a formal source of law in the English system? (Cf Birks (1994) 14 LS 156.) Is law based on general principles? Is the role of the House of Lords to develop broad principles or is it to decide particular cases between particular litigants? (Cf above, pp 10–13.) Is academic writing (doctrine) now a formal source of law? Is the civil (continental) law becoming a formal source of law? Should UK law schools now be teaching the law of obligations in a comparative, or at least a European, context? Are there different kinds of law textbooks—for example, are there ‘academic’ and ‘practitioner’ textbooks? If you had written what you considered to be an ‘academic’ work, would you regard it as an insult if a colleague called it a ‘practitioner’ work? Is there too much law?
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CHAPTER 2
LEGAL METHOD AND THE COMMON LAW
1 INTRODUCTION An understanding of the English law of obligations requires knowledge not just of the law applicable to factual situations falling within its province, but also of the application process itself. This may seem a statement of the obvious. Yet it is only in more recent years that the importance of legal method as an object of study in itself has become fully recognised and this recognition is, in turn, having an impact both on substantive legal subjects and on legal theory. There are several reasons for the traditional lack of emphasis in legal education on methodology. First, it was assumed until quite recently that knowledge of law consisted of having knowledge of legal propositions, that is to say, rules and principles. In turn, these rules and principles applied themselves to factual situations in a rather mechanical fashion. Once the facts were established, the rule applied itself to these facts through the syllogism (deductive logic); the rule acted as the major premise, the facts as the minor, and the court decision as the conclusion. This logical approach to legal method has been particularly strong in the civil law tradition where the codes represented axiomatised—that is to say, logically complete—systems of major premises ready to apply themselves to any factual situation that arose. Secondly, legal historians, despite having a profound knowledge of law (particularly Roman law) in terms of rules and institutions, have been less interested in the methods and habits of thought of the Roman jurists and their successors (Strömholm, A Short History of Legal Thinking in the West, 1985, Norsteds, pp 46, 67). This is not to say that there are no profound studies. But the strength of the rule thesis of legal knowledge has been such that it has militated against the search for alternative methodological models. And so, as Susskind has observed, there is ‘unequivocal help available neither from legal theory nor from the primary or secondary sources of law’ when it comes to alternatives to the rule thesis (Expert Systems in Law, 1987, OUP, p 154). One must add that this lack of interest in alternatives has also been encouraged by the ideological factor that underpins the rule thesis. The idea that law is a set of ascertainable rules which are to be applied in a neutral fashion is part of a positivist philosophy that has been particularly strong for well over a century now. It is only with the search for an escape from positivism that methodology has come back into focus. Yet even a philosopher like Ronald Dworkin, who 111
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has done more than anyone in the common law world to re-emphasise the role of adjudication in the formulation of philosophical theory, continues to subscribe to the thesis that legal knowledge is based on rules and principles (Susskind, Expert Systems in Law, 1987, OUP, pp 78–79). All the same, Dworkin has moved thinking away from the mechanics of the syllogism towards the interpretative role of the judge, and while this shift has not undermined, as such, the rule thesis, he has opened up the methodological debate in, for example, distinguishing between easy and hard cases (see Taking Rights Seriously, 1977, Duckworth, pp 24ff, 105ff). In easy cases, it may be that a legal rule applies itself in a mechanical fashion, but in hard cases—that is, cases where there is no easy correspondence between the rule and the facts—the interpretative role of the judge becomes the central object of study. The judge, according to Dworkin, involves himself in a process that is analogous to writing a chain novel. ‘In this enterprise’, writes Dworkin, ‘a group of novelists writes a novel seriatim; each novelist in the chain interprets the chapters he has been given in order to write a new chapter, which is then added to what the next novelist receives, and so on’ (Law’s Empire, 1986, Fontana, p 229). The difficulty with this otherwise valuable methodological analysis is that it assumes that legal reasoning is a matter of interpreting language—a matter of interpreting texts, of interpreting rules and principles (ars hermeneutica). There are two general problems with this approach. First, the hermeneutical (interpretative) method is just one of a number of different schemes of intelligibility that are used in social science reasoning. Thus the hermeneutical scheme can be contrasted with a functional approach or a structural approach or, indeed, with several other schemes of intelligibility. These various schemes have been identified and analysed by the French social theorist J-M Berthelot in his book, L’intelligence du social, 1990, PUF, Chapter II; and while this work is rather outside a course on the law of obligations, it cannot be completely ignored by lawyers. What Berthelot can teach lawyers is that their legal reasoning schemes are nothing special. The various approaches adopted by judges in their analysis of facts and their fashioning of solutions can be classed according to the same schemes of analysis as those used by social scientists in general. Thus, lawyers and legal theorists make use of the causal scheme, the functional scheme, the structural scheme, the hermeneutical scheme, the actional scheme and the dialectical scheme depending upon their standpoint and/or view of the world (see below, pp 169–77). When one judge differs from another in respect of the same facts, it is often because each judge is approaching the case from a different schematic viewpoint (see, for example, Re Rowland, p 166). Equally, there is little point in trying to reconcile the theory of Ronald Dworkin with the functional approaches of the American Realists or with scholastic (dialectical) methods of the medieval Glossators or with the structural approach of the semioticians. This is not to say, of course, that the various approaches are mutually exclusive. Criminal and tort lawyers use, for example, the causal (chain of causation) and the actional (reasonable man, 112
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bon père de famille, etc) as well as a dialectical approach at the procedural level (accusatorial procedure). The Glossators, and in fact the Roman jurists themselves on occasions (see Dig 50.16), share with Dworkin the general hermeneutical assumption that the source of law is a text. Indeed all lawyers have to resort to the hermeneutical scheme when it comes to the interpretation of contracts and statutes. The point to be made, however, is that this is just one scheme of analysis amongst several. The second problem with the Dworkin approach is that it assumes that knowledge of law is knowledge of rules and principles (written or unwritten). Is this a satisfactory knowledge thesis? Can the hermeneutical analysis ever be the basis of an exclusive scientific analysis of method? Does not a science function at one and the same time at the level of a discourse (language and texts) and at the level of the facts themselves? Does not a science organise the facts? Law, of course, may not be a science in the natural, or hard, science sense; yet it does seem to construct its own facts, as the materials in this chapter will hopefully show. Now, when it comes to fact construction, two further points need to be stressed. First, as Berthelot concludes, if one had to abstract from all the various schemes one fundamental theme or dichotomy, it is perhaps that of the opposition between a ‘holistic’ and ‘atomistic’ analysis of social facts (Berthelot, pp 152–61). Does one view a series of facts as a ‘thing’ or event in itself, or only as a collection of individual and separate events? This kind of question has a long history in philosophy and epistemology (see below, p 128) and is beyond the scope of an obligations course. Yet the difference is crucial in legal analysis, as cases like Re Rowland (p 166) or Lazenby Garages v Wright (p 578) show. Secondly, the relationship between a ‘science’ and facts is an extremely complex one. Scientific theory does not have as its object actual facts, but what one leading philosopher of science has called virtual facts. That is to say, facts that are as much determined by the scientific model through which they are analysed as by any objective reality (Granger, La science et les sciences, 2nd edn, 1995, PUF, p 49). Thus, the object of science is not reality itself, but the schemes and models of science, and the effectiveness of such a model is determined by its ability at one and the same time to explain and predict (Granger, pp 70, 78–84). Law, as we have said, may not be a science in the natural science sense. But its history is not so different in many ways. This history is not a history of events as such; it is ‘above all a genealogy of “categories” which have successively made up the objects of a science’ (Granger, p 115; and see Bryant v Herbert, p 114). Legal method is thus not just about interpretation. It is equally about the construction and reconstruction of facts through the use of institutions (see Chapter 1), concepts and categories.
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(a) Historical considerations: the forms of action Bryant v Herbert (1877) 3 CPD 389 Court of Appeal Bramwell LJ: It seems to me that the question in this case is, what is the meaning of the words ‘in any action founded on contract’, and ‘on any action founded on tort’… The words are not words of art even as much as ex contmctu or ex delicto would be. They are plain English words, and are to have the meaning ordinary Englishmen would give them. What is the foundation of an action? Those facts which it is necessary to state and prove to maintain it, and no others. This really seems a truism: unless those necessary facts exist, the action is unfounded. All other facts are no part of the foundation. There is a further observation. This statute passed after the Common Law Procedure Acts. They did not abolish forms of action in words. The Common Law Commissioners recommended that: but it was supposed that, if adopted, the law would be shaken to its foundations; so that all that could be done was to provide as far as possible that, though forms of actions remained, there never should be a question what was the form. This was accomplished save as to this very question of costs in actions within the county court jurisdiction. Until the passing of the statute [County Courts Act] we are discussing, it was necessary to see if an action was assumpsit, case, etc. But the Common Law Procedure Act having passed, and the forms of actions being practically abolished, the legislature pass this Act dropping the words ‘assumpsit, case’, etc, and using the words ‘founded on contract’, ‘founded on tort’. This shows to me that the substance of the matter was to be looked at. One may observe there is no middle term; the statute supposes all actions are founded either on contract or on tort. So that it is tort, if not contract, contract if not tort. Then is this action on the face of the statements of claim and defence founded on contract or on tort. All that is alleged is that the plaintiffs are owners of the picture, and that the defendant detains it. This means wrongfully detains it, not merely has in his possession, and negatively does not give it up. Then the action is manifestly founded on a tort on the pleadings. But so it is if the facts are looked at. I doubt if there was any contract between the parties… These are the considerations on which I think this case ought to be decided, and not by inquiries whether detinue is an action ex contractu or ex delicto. I think that the legislature intended that the substance of the action and not its form should be looked at. It leaves out what was in the former Act, ‘assumpsit, case’, etc, and uses general words ‘founded on contract’, ‘founded on tort’. But if the old learning as it was called is to be brought to help us, I should come to the same conclusion. No doubt dicta and decisions are to be found that detinue is an action ex contractu or ex quasi contractu, etc, but there are dicta and decisions the other way. It is not easy to make sense of them: perhaps the nature of the thing does not admit of it. It cannot be settled by saying that debt and detinue could be joined, and that actions of tort could not be joined with actions on contract. Actions on contract could not be joined, for example, debt and assumpsit. The reason being unconnected with the question whether
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‘The principles of the common law were not laid down in the abstract, but grew around the forms through which justice was centralised and administered by the king’s courts. There was a law of writs before there was a law of property, or of contract, or of tort… A plaintiff did not… concoct his own writ… He had either to find a known formula to fit his case, or apply for a new one to be invented… After [the 13th century], although occasional innovations were sanctioned by Parliament, the categories became more or less closed. The effect was momentous. Finding the right formula was no longer simply a matter of consistency and routine… Formulae…were seen as defining the rights and remedies recognised by the common law, and thus as fixing the common law within an immutable conceptual framework… Later lawyers referred to the compartments of law and practice associated with different writs as the “forms of action”. These forms of action were the first object of legal study’ (Baker, An Introduction to English Legal History, 3rd edn, 1990, Butterworths, pp 63, 65, 66–67). How did the English law of actions differ from the Roman law of actions? How did the reforms of the 19th century change legal analysis? What must a plaintiff plead after the procedural reforms: just the facts, or the facts plus the law?
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These judgments illustrate the point made in the introduction about the unreality of distinguishing between ‘fact’ and ‘science’ (that is, law). What are contractual facts as opposed to tort facts? How does one know if a set of facts gives rise to an action founded on ‘contract’ or ‘tort’? Must all actions for damages which cannot be classified under ‘contract’ be classified under ‘tort’? Is it not the law, as much as any social fact, that is ‘constructing’ and categorising the facts? Where do the categories ‘contract’ and ‘tort’ come from, given that they do not appear to be part of the early history of English legal thought? What is the relationship between these two categories and the facts which go to make up a common law ‘action’? Is there a difference between an action founded on ‘contract’ and an action ex contractu? If so, what is the difference? What is Bramwell LJ advocating in respect of legal education? In what way does Brett LJ differ from Bramwell LJ? ‘The plaintiff has chosen to bring an action of trover, and he now says, I ought to be allowed to amend by turning this action into an action of account… But the whole case is entirely different. The whole question before the jury would be different, and the whole account would have to be taken upon totally different principles from anything that was done before the jury… That verdict has been founded on a notion of tort’ (Lord Hatherley LC in Jacobs v Seward (1872) LR 5 HL 464, p 476). Is this an example of the forms of action ruling from the grave? Do judges still have to deal with these ‘forms of action’ problems? (Cf Roy v Kensington and Chelsea FPC, p 88.)
(b) Modern law: remedies and rights Letang v Cooper [1965] 1 QB 232 Court of Appeal Diplock LJ:… A cause of action is simply a factual situation the existence of which entitles one person to obtain from the court a remedy against another person. Historically, the means by which the remedy was obtained varied with the nature of the factual situation and causes of action were divided into categories according to the ‘form of action’ by which the remedy was obtained in the particular kind of factual situation which constituted the cause of action. But that is legal history, not current law… The Judicature Act 1873 abolished forms of action. It did not affect causes of action; so it was convenient for lawyers and legislators to continue to use, to describe the various categories of factual situations which entitle one person to obtain from the court a remedy against another, the names of the various ‘forms of action’ by which formerly the remedy appropriate to the particular category of factual situation was obtained. But it is essential to realise that when, since 1873, the name of a form of action is used to identify a cause of action, it is used as a convenient and succinct description of a particular category of factual situation which entitles one person to obtain from the court a remedy against another person.
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Legal Method and the Common Law To forget this will indeed encourage the old forms of action to rule us from their graves...
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‘The words “cause of action” comprise every fact, though not every piece of evidence, which it would be necessary for the plaintiff to prove, if traversed, to support his right to judgment of the court… It seems to me clear that the facts which give rise to a remedy in England gave rise to a comparable civil remedy in Spain, albeit such remedy falls to be pursued in essentially criminal proceedings by intervention of the aggrieved party …’ (Potter J in Black v Yates [1992] QB 526, pp 543,544). What if one did not have to prove fault in one system in order to succeed in a claim in damages? Would this make the cause of action very different from one based on fault? ‘In the pragmatic way in which English law has developed, a man’s legal rights are in fact those which are protected by a cause of action. It is not in accordance, as I understand it, with the principles of English law to analyse rights as being something separate from the remedy given to the individual… [I]n my judgment, in the ordinary case to establish a legal or equitable right you have to show that all the necessary elements of the cause of action are either present or threatened’ (Sir Nicolas BrowneWilkinson, Kingdom of Spain v Christie, Manson and Woods Ltd [1986] 1 WLR 1120, p 1129). Is the notion of a ‘right’ (le droit subjectif) unknown in English law? Will the Human Rights Act 1998 eventually change this remedial view of English law? ‘[T]he question whether the right exists cannot be determined by inquiring whether the action for money had and received is the appropriate form of plea. If the right exists, the form of the plea is appropriate enough. If the right does not exist it cannot be enforced no matter how attractively it might be disguised by the pleader. The question is not now one of the appropriate form in which to clothe the right, but whether or not the right exists, although the absence of any clothing that fits may be an indication of the non-existence of the right’ (Stable J in Dies v British and International Mining and Finance Corporation [1939] 1 KB 724, pp 738–39). Compare and contrast the view of Stable J with that of Sir Nicolas Browne-Wilkinson. Mercedes Benz AG v Leiduck [1996] 1 AC 284 Privy Council (See pp 219, 273.)
Questions 1
Is it really possible to talk of rights underlying causes of action in English law? What were the rights of the plaintiff, if any, in Esso v Southport Corporation (p 216)? Are not rights defined only in respect of the existence 117
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or non-existence of a cause of action. (Cf Kingdom of Spain v Christie’s, p 209?) Can equitable remedies create new rights?
3 PLEADINGS (STATEMENTS OF CASE) Sterman v EW and WJ Moore Ltd [1970] 1 QB 596 Court of Appeal Lord Denning MR:… Here was a plaintiff who issued his writ and served it on the defendants well within the period of limitation. They knew perfectly well that the plaintiff was claiming damages for his fall from the trestle because it was their fault. Yet they seek to bar him on the most technical consideration—just because he omitted the words ‘for negligence and breach of statutory duty’. I do not think that we should allow this technical objection to prevail… [W]e should allow the plaintiff to amend the writ so as to state in terms that his claim is for damages ‘for negligence and breach of statutory duty’. I see no harm in adding the further claim for damages for ‘breach of agreement’… Salmon LJ: I agree. I would emphasise that it is highly desirable that the indorsement to the writ should plainly set out the cause of action on which the plaintiff relies. It may be that it is sufficient…if the writ merely gives a concise statement of the nature of the relief or remedy required by the plaintiff; but the disadvantage of confining the indorsement of the writ to a concise statement of the relief or remedy required (as the plaintiff has done in the present case) is that the plaintiff may find himself in considerable difficulty when he comes to deliver his statement of claim. It seems to me, although I am expressing no concluded view on the point, that the provisions of [the Rules of Supreme Court] preclude the plaintiff from including any cause of action in his statement of claim which is not mentioned in the writ… Barclays Bank plc v Fairclough Building Ltd [1995] QB 214 Court of Appeal (See p 395.) Beldam LJ:… Finally, though it is unnecessary to do so, I should deal with the point raised by Mr Elliott that the ground on which the judge found the plaintiff at fault was not pleaded. Mr Elliott did not put his case on the footing that he would have called any additional evidence had the case found against the plaintiff been pleaded. He frankly stated that he could not now say with the benefit of hindsight how he would have approached the allegation on which the plaintiff was found to have been at fault. It is not, however, difficult to see that there might have been evidence, for example directed to the issue whether the plaintiff in the light of its previous dealings with the defendants ought to have regarded it as prudent to inform itself of the method of cleaning adopted by the subcontractor of whose employment it was not informed. Mr Butcher emphasised that the judge’s findings were based on the evidence of the plaintiff’s own witnesses given in answer to questions in crossexamination.
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Legal Method and the Common Law As in many arguments on pleadings, the question ultimately comes down to one of degree. At one end of the scale there are arguments which could be said to be merely technical; at the other there are cases in which the party concerned is entitled to hold his adversary to the case pleaded against him. One such case was Esso Petroleum Co Ltd v Southport Corpn [1956] AC 218. Lord Radcliffe said, p 241: My Lords, I think this case ought to be decided in accordance with the pleadings. If it is, I am of opinion, as was the trial judge, that the respondents failed to establish any claim to relief that was valid in law. If it is not, we might do better justice to the respondents—I cannot tell, since the evidence is incomplete—but I am certain that we should do worse justice to the appellants, since in my view they were entitled to conduct the case and confine their evidence in reliance upon the further and better particulars of para 2 of the statement of claim which had been delivered by the respondents. It seems to me that it is the purpose of such particulars that they should help to define the issues and to indicate to the party who asks for them how much of the range of his possible evidence will be relevant and how much irrelevant to those issues. Proper use of them shortens the hearing and reduces costs. But if an appellate court is to treat reliance upon them as pedantry or mere formalism, I do not see what part they have to play in our trial system. Whilst the departure in that case was more florid than that in the present case, it is the fact that the plaintiff succeeded in refuting the allegations of fault made against it in the pleadings. For my part I would hold that the ground on which the judge found the plaintiff at fault so far departed from the scope of the pleaded case that the defendant should not have been allowed to rely on it without amending its pleaded case. The plaintiff objected at the trial but no amendment was made. Had it been necessary to do so, I would have allowed the appeal on this ground too. Hoecheong Products Ltd v Cargill Ltd [1995] 1 WLR 404 Privy Council This was a successful appeal to the Privy Council against a decision of the Court of Appeal of Hong Kong. One ground of the appeal was that the Court of Appeal had ‘decided in favour of the buyers on a ground of its own devising, which had not been pleaded, investigated at the trial or even argued before the Court of Appeal itself (Lord Mustill). Lord Mustill: This appeal from a decision of the Court of Appeal of Hong Kong springs from a contract whereby Hoecheong Products Co Ltd (‘the sellers’) agreed to sell to Cargill Hong Kong Ltd (‘the buyers’) 10,000 tonnes of cotton seed expellers. The sellers did not deliver the whole contract quantity. The buyers claimed damages. The sellers relied on a ‘force majeure’ clause in the contract to exempt them from liability. The ground asserted was that the contract called for shipment of goods originating in Henan province, and that there had been such a severe drought in Henan during the growing season that it was impossible for them to procure goods from the only permitted suppliers, the China National Native Produce and Animal ByProducts Import and Export Corporation (‘CNNP’). The buyers denied that the force majeure clause applied to the facts of the case, or that the formalities
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Sourcebook on Obligations and Remedies which it prescribed had been complied with. There were numerous other points of contention between the parties. Although the sum in dispute was, by the standards of modern commercial litigation, comparatively modest, every issue was tenaciously fought. At the trial before Deputy Judge Sharwood the sellers won on sufficient of the points to obtain a judgment in their favour. On appeal many of the deputy judge’s conclusions were upheld, but the buyers prevailed on two central issues, and judgment was given in their favour for US$108,000 with interest and costs. The sellers now appeal to their Lordships’ Board… Thus far, there is nothing exceptional about the case. There is, however, another and much less conventional feature; namely, that the Court of Appeal of Hong Kong also decided in favour of the buyers on a ground of its own devising, which had not been pleaded, investigated at the trial or even argued before the Court of Appeal itself… … [I]f the third element in the chain of reasoning had been exposed to argument it may be—their Lordships cannot say—that the law would have been differently stated. The proposition extracted from Benjamin on Sale of Goods, 4th edn, 1992, does not in fact represent the concluded view of the editors, but merely their opinion that it is arguable. The cases on this question (and there are others beside those cited in the judgment) are not straightforward, and it is at least possible that closer scrutiny would have led the court to a reading which allowed the sellers the benefit of the clause, even on the assumed facts. In the event, the sellers had no opportunity to test the proposition which defeated their defence. The sellers now contend that this procedure was impermissible, and that the decision of the Court of Appeal of Hong Kong on the new question cannot be allowed to stand. Their Lordships must agree. The principles which inhibit the parties from raising new points on appeal, particularly where the facts have not been investigated at the trial, are so well established that it is unnecessary to quote from authorities such as Tasmania (Owners of) v City of Corinth (Owners of) (1890) 15 App Cas 223, Connecticut Fire Insurance Co v Kavanagh [1892] AC 473 and Esso Petroleum Co Ltd v Southport Corpn [1956] AC 218. These principles apply equally where it is the court, rather than the parties, which seeks to introduce the new legal issue. If in the present case the matter had been ventilated in open court it would, their Lordships believe, soon have become apparent that there had been insufficient exploration of the facts at the trial to permit the application of whatever law might have emerged from an examination of the authorities. In the event, however, even this modest examination did not take place. The point appears to have been an afterthought. It does, of course, happen from time to time that a court comes to learn of a statute or authority bearing importantly on an issue canvassed in argument but, through an oversight, not then brought forward. The court may wish to take the new matter into account. Before doing so it should always ensure that the parties have an opportunity to deal with it, either by restoring the appeal for further oral argument, or at least by drawing attention to the materials which have come to light and inviting written submissions upon them. The present case required even more meticulous procedures, for what the court introduced was not new material on the existing issue but an entirely new question of
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Legal Method and the Common Law law and fact. The occasions when an appellate court would find it proper even to contemplate such a course after the conclusion of the arguments must be rare, but if it were ever to do so the first step must always be to have the matter thoroughly explored by adversarial means, as regards not simply the merits of the new question but also the propriety of entering upon it at all. If this had happened here, the sellers should have had little difficulty in showing that the case had proceeded too far to enable the question to be taken into account. The judgment would then have proceeded on the basis of the issues which had been in existence throughout, although the court could, if it had wished, have kept the point open for consideration in some future case by emphasising that it had not been argued and did not form part of the decision. In the event, however, none of this happened. The course taken deprived the sellers not only of the opportunity to argue the point on the merits (which in itself would have required the Board to set aside this part of the judgment) but also of an unanswerable objection on procedural grounds. With the best of intentions, the Court of Appeal of Hong Kong acted in a way which was unfair to the sellers. The new issue should not have formed a ground for the decision under appeal, and their Lordships propose to say nothing more about it… … Accordingly, their Lordships will humbly advise Her Majesty that the appeal should be allowed, and the judgment of the trial judge restored. The buyers must pay to the sellers their costs of the appeal to the Board and in the courts below.
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What role do the pleadings play in the determination of the law applicable? Can a judge raise points of law not mentioned by the parties in their pleadings? Da mihi factum, dabo tibi ius (‘give me the facts and I will give you the law’). Is it not a principle of Western law that parties are under a duty to plead only the facts and that it is the court that applies the law? Are there any systems of law where the parties plead no law at all, only the facts? P applies for an injunction against D to stop D from distributing “bootleg’ (unauthorised) recordings of live concerts performed by P. In his pleadings and arguments P bases his claim on the sole ground that D is committing the tort of breach of statutory duty. It is clear to you, as trial judge, that there is no tort of breach of statutory duty: nevertheless, can you issue the injunction on the ground of unjust enrichment? Could you issue the injunction on the basis that there is an interference with P’s property rights? Read Drane v Evangelou [1978] 1 WLR 455 in the law report. Would you have appealed against Lord Denning’s judgment?
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4 THE LEGAL RULE Roberts Petroleum Ltd v Bernard Kenny Ltd [1983] 2 AC 192 House of Lords (See p 8.) Spring v Guardian Assurance plc [1995] 2 AC 296 House of Lords The central issue in this appeal is whether a person who provides a reference in respect of another who was formerly engaged by him as a member of his staff…may be liable in damages to that other in respect of economic loss suffered by him by reason of negligence in the preparation of the reference’ (Lord Goff). The House of Lords held that an employer may be liable in negligence for such an inaccurate reference (see p 693). Lord Lowry:… It is in the tradition of the English case law method to decide this appeal on its facts and not be deterred by reflecting on all possible situations in which a reference might be called for. Even if it is debatable where the line should be drawn, I am confident that from the plaintiffs point of view this case falls on the right side of it… Lord Woolf:… It only remains for me to underline what I anticipate is already clear, that is, that the views which I have expressed are confined to the class of case with which I am now dealing. Some of the statements I have made I appreciate could be applied to analogous situations. However, I do not intend to express any view either way as to what will be the position in those analogous situations. I believe that they are better decided when, and if, a particular case comes before the court. This approach can lead to uncertainty which is undesirable. However, that undesirable consequence is in my view preferable to trying to anticipate the position in relation to other situations which are not the subject matter of this appeal…
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‘When a judge asserts a legal rule to be applied, he does so only in view of, and in relation to, the facts of the case before him’ (David). What the late Professor David was alluding to here is the habit of common lawyers to formulate and apply rules only within specific factual situations. Not for them the broad principle capable of covering a range of factual situations. Is his observation supported by the comments of the judges above? Are rules formulated within very narrow and specific factual situations capable of being applied via the syllogism? What method of application does Lord Woolf envisage? What do the Lords of Appeal envisage their role to be in the legal system? The common law does not consist of “rules” in the orthodox sense of the term, say, according to the meaning which civilians attach to the notion. In other words, the common law does not generate canonical texts or formulations. To represent the common law as a set of rules is to inflict an “alien conception” on it. Judicial decisions may, in time, produce what 122
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appears like a set of rules; yet… [t]he “rules” are…no more than renditions by later judges of patterns which they perceive as having emerged from discrete and particularistic judicial interventions… Common law “rules” having minimal prescriptive impact, the courts effectively make and unmake the law at will’ (Legrand, ‘European legal systems are not converging’ (1996) 45 ICLQ 52, pp 67–68). As legislation increasingly becomes the main source of English law, will this view of the common law have to change? Is Legrand saying that English law can be described by rules but does not consist of rules? Professor Peter Birks has criticised Spring on the ground that two legal categories intersect. Defamation, which is an infringement of the reputation interest, intersects with negligence, which is a wrong based on a species of fault. According to Birks, this leads to a situation where a careless invasion of the reputation interest could give rise to two wrongs, namely defamation and negligence, when a rational system should see only one wrong. In order to give intellectual support to his criticism, he draws an analogy with zoology: ‘My canary is yellow and eats seeds. If all birds are seed-eaters, yellow, or others, my canary counts twice. Are there two birds or one? If there come to be two birds, the double-vision is due to the bent classification. There is only one bird’ ((1996) 26 UWAL Rev 1, p 6). Is this criticism based upon a sound epistemological (theory of knowledge) understanding of the role of taxonomy? Is there not an important difference between taxonomy schemes based on observable objects (plants, animals, rocks, etc) and schemes, like law, based on what Villa has called ‘atypical objects’, which cannot be observed without the aid of concepts and theoretical categories (La science du droit, 1990, Story/LGDJ, p 84)? Are not these concepts and theoretical categories part of the ‘science’ (that is, law) itself, thus making law the object of its own science? If so, is not the result as follows: that there is no rigour emanating from the object of science and that law is free to construct or deconstruct its own objects? Is this not what happened in Donoghue v Stevenson?. Indeed, if Birks is right, could it not be said that Donoghue must be wrong? Does it not allow commercial contractual interests (no duty based on privity of contract) to intersect with negligence (duty based on wrong)?
5 GENERAL PRINCIPLES OF LAW Knuller Ltd v DPP [1973] AC 435 House of Lords Lord Simon of Glaisdale:… It is, in general, the difference between mature and rudimentary legal systems that the latter deal specifically with a number of particular and unrelated instances, whereas the former embody the law in comprehensive, cohesive and rational general rules. The law is then easier to 123
Sourcebook on Obligations and Remedies understand and commands a greater respect. Fragmentation, on the other hand, leads to anomalous (and therefore inequitable) distinctions and to hedging legal rules round with technicalities that are only within the understanding of an esoteric class. The general development of English law (like that of other mature systems) has been towards the co-ordination of particular instances into comprehensive and comprehensible general rules. The evolution of the compendious tort of negligence from a number of disparate forms of action is a well known example from the common law: the Theft Act 1968 may be regarded as a statutory counterpart. (I must, however, add the rider that English law has never felt bound to carry every rule to its logical conclusion in the face of convenience.) But the common law proceeds generally by distilling from a particular case the legal principle on which it is decided, and that legal principle is then generally applied to the circumstances of other cases to which the principle is relevant as they arise before the courts… Woolwich Equitable Building Society v Inland Revenue Commissioners [1993] AC 70 House of Lords (See p 104.)
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‘By natural law it is equitable that no one should be enriched by the loss or injury of another’ (Dig 50.17.206). Was this principle actually applied in Lipkin Gorman v Karpnale Ltd, p 782, and in Woolwich? ‘I call a “principle” a standard that is to be observed, not because it will advance or secure an economic, political, or social situation deemed desirable, but because it is a requirement of justice or fairness or some other dimension of morality… Rules are applicable in an all-or-nothing fashion… But this is not the way…principles…operate… A principle… states a reason that argues in one direction, but does not necessitate a particular decision’ (Dworkin, Taking Rights Seriously, 1977, Duckworth, pp 22, 24, 25, 26). Does the law of contract consist of rules or principles? (Cf Chapters 4–6.) What about the French or German civil codes: are these codes of rules or principles? ‘[I]f there is one thing which more than another public policy requires it is that men of full age and competent understanding shall have the utmost liberty of contracting, and that their contracts when entered into freely and voluntarily shall be held sacred and shall be enforced by Courts of Justice’ (Sir George Jessel MR in Printing and Numerical Registering Co v Sampson (1875) LR 19 Eq 462, p 465). (Cf CC, Art 1134.) Is this a principle? ‘You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour’ (Lord Atkin, Donoghue v Stevenson, above, p 65). (Cf CC, Art 1382; Hedley Byrne and Co v Heller and Partners, p 470.) Is this a rule or a principle?
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‘We think that the true rule of law is, that the person who for his own purposes brings on his lands and collects and keeps there anything likely to do mischief if it escapes, must keep it in at his peril, and, if he does not do so, is prima facie answerable for all the damage which is the natural consequence of its escape’ (Blackburn J in Rylands v Fletcher, below, p 000). If this is a principle, would you expect it function in much the same way as CC, Art 1384?
6 LEGAL CONCEPTS (a) Normative concepts (i) Rights Housing Act 1985 (c 68) (See p 47.) Ex p Island Records [1978] Ch 122 Court of Appeal Lord Denning MR:… The question…becomes this: has the plaintiff a particular right which he is entitled to have protected? To this the answer which runs through all the cases is: a man who is carrying on a lawful trade or calling has a right to be protected from any unlawful interference with it… It is a right which is in the nature of a right of property… [The Attorney General] has, we are told, refused his consent to a relator action—presumably because no public rights are involved. So perforce if the law is to be obeyed— and justice to be done—the courts must allow a private individual himself to bring an action against the offender—in those cases where his private rights and interests are specially affected by the breach [of the criminal law]. This principle is capable of extension so as to apply not only to rights of property or rights in the nature of it, but to other rights or interests… Samuel, G and Rinkes, J, Law of Obligations and Legal Remedies, 1996, Cavendish Publishing, p 68 A legal right…is a construct of legal science: it takes its form from the relationship between persona and res and this is the reason why one always talks of a right to something. In other words a right is a legal concept that uses the conceptual structure of the property relationship between person and thing and applies it to other legal (and indeed political and social) relationships. Thus performance under a contract can be seen as a res to which the other contracting party (persona) is entitled and this leads to a situation where one can talk in terms of a right arising from a contract. Re KD (A Minor) [1988] 1 AC 806 House of Lords Lord Oliver:… The word ‘right’ is used in a variety of different senses, both popular and jurisprudential. It may be used as importing a positive duty in some other individual for the non-performance of which the law will provide an appropriate remedy, as in the case of a right to the performance of a contract. 125
Sourcebook on Obligations and Remedies It may signify merely a privilege conferring no corresponding duty on any one save that of non-interference, such as the right to walk on the public highway. It may signify no more than the hope of or aspiration to a social order which will permit the exercise of that which is perceived as an essential liberty, such as, for instance, the so called ‘right to work’ or a ‘right’ of personal privacy.
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What is a relator action? (Cf Gouriet v UPOW [1978] AC 435.) Does a trader really have a right not to have his, her or its trade unlawfully interfered with? If D unlawfully causes a road accident with the result that a street is closed to the public for several hours, can traders in that street sue D for their loss of takings? What if D unlawfully sets up his market stall near a place where others are lawfully trading: can these traders sue D for any drop in their takings? Can they deprive D of any profit he might make? Can the local authority, which issues trading licences, sue D for damages? Could the local authority obtain an injunction against D? Could they sue D in debt or account for the (illegal?) profit? (Cf Stoke-on-Trent CC vWandJ Wass Ltd [1988] 1 WLR 1406.) Is the purpose of the criminal law to protect individual rights? When one talks of rights in contract, is this to import into contract language from the law of property? Is a contractual right a property right? (Cf Beswick v Beswick, pp 78, 249.) Are there such things as natural and/or human rights? Are such rights recognised by the English courts? If there are certain rights that are inalienable, does this undermine the theory that legislation is the supreme source of law? Does it undermine the idea that law consists of positive rules? Does one have a right to liberty? Samuel, G, The Epistemology of Rights, Conference Paper, March 1999 The purpose of this paper is to provide an epistemological (theory of knowledge) background to the concept of a right. The topic is, however, so vast that it is unrealistic in a single conference presentation to do more than present a number of general lines of enquiry. These lines will focus mainly on the legal structure of a right viewed diachronically and in the contexts of a legal and a social science epistemological investigation. § 1 Introduction The term ‘right’ expresses a legal relation or situation viewed from the position of the individual. It is a concept that is fully normative in that it expresses in itself an ought situation. To say that a person has a right to something is a complete legal statement and nothing more needs to be added to give effect to its normative quality. ‘P has a right to X’ means that P is entitled to X and if X is in the possession of D this latter person is said to be under a duty (another normative concept) to deliver X up to P. Rights are normally divided 126
Legal Method and the Common Law into real and personal rights. The first are good against the whole world (in rem), while the second are valid only in respect of another person (in personam). In the civil law tradition, whose languages do not have the term ‘right’, the concept is given expression by the term droit subjectif (and equivalents in other languages). Several epistemological questions emerge. First, how did the term ‘subjective right’ develop as such a powerful legal concept? Secondly, how are rights to be distinguished from other legal concepts such as ‘duty’, ‘interest’ and ‘expectation’? Thirdly, what are the theoretical and ideological contexts required for the development of rights? § 2 Ius and dominium The term right (droit subjectif) is developed from the Roman law term ius. In Roman law itself ius did not mean ‘right’ in the modern sense; it meant, among other things (D 1.1.11), a legal connection (D 1.1.12). Originally, it gave expression to an objective legal relation flowing between two people or between a person and a thing. However such a relation came, in late Roman law, to give expression to substantive ‘rights’ in the sense of entitlements at the level of the law of actions. Actio autem nihil aliud est, quam jus persequendi judicio, quod sibi debetur (J 4.6 pr; D 44.7.51). This is clearly a major development, but ius was never seen as a form of potestas (power) by the Roman jurists (D 1.1.11). Power was, instead, to be found in the two key concepts of dominium (ownership) and imperium (sovereignty) (D 50.16.215). Now the Romans never identified dominium with ius; this was a development brought about by the later civilians (see Tuck, Natural Rights Theories, 1979). Thus, the Post-Glossators (13th–14th centuries) in attempting to Romanise feudal relations with land ended up by seeing dominium as a form of ius. Ownership became a kind of ‘super real right’ with the implication that all other iura were lesser, but still powerful, ‘rights’; in other words iura (rights) had become powers which all persons had in relation to things (res) (Zenati and Revet, Les biens, 2nd edn, 1997, p 134). This was an important development since not only was dominium a power relation in itself, but the power was given expression in law through a vindicatio claim, the paradigm actio in rem. Once P had established that he was owner of a thing in the wrongful possession of another, the judge had to order the thing to be redelivered to P (D 6.1.9). Ius thus became infected with this ability to vindicate something. This ‘something’ (res) was also capable of abstraction since the Romans themselves had recognised intangible things as forms of property (res incorporates). The medieval lawyers accordingly provided the structural foundation in law for the development of ius as a power relation; as a legal relation giving expression to vindicate a claim for a rarefied ‘thing’. Rights are thus property talk. § 3 The nominalist revolution Roman law might have provided the structural foundation for the development of the modern right, but the Romans did not provide the political context as such. Roman society was not envisaged as a mass of individuals, but in terms of the Aristotelian polis. Certainly the legal foundation could be seen as being essentially individualist in as much as the ius privatum was specifically devoted to the interests of individuals (D 1.1.1.2) and there is even the outline of an early social contract theory with the lex regia (D 1.4.1). 127
Sourcebook on Obligations and Remedies But such individualism was strictly confined to the commercial domain. Neither dominium nor ius were sources of political power in any conceptual sense. However at the time when the Post-Glossators were beginning to see dominium as a ius, the philosopher William of Ockham and his followers were provoking an epistemological and ideological revolution. According to Ockham terms such as ‘town’ or ‘forest’ were verbal entities only; that is to say, they were nothing more than names (nomina). What they referred to had no existence outside the human mind. What existed were individual human beings (individuum) and individual trees. Thus ‘the individualist paradigm began to take shape in the epistemological, then in the ‘sociological’ and ethical, fields, in opposing the realist and holistic philosophy of Saint Thomas Aquinas’ (Laurent, Histoire de I’individualisme, 1993, p 23). The individual is a unique and separate being who lives only through himself. The Church and the town no longer existed as ‘realities’ but were simply names to express a collection of individuals. The political birds (so to speak) that took wing in this nominalist revolution, finally came home to roost in the celebrated ideological statement of Margaret Thatcher that ‘there is no such thing as society’. There ‘are individual men and women and there are families’ ((1987) Woman’s Own, 31 October). § 4 Social contract theory The result of this thinking was revolutionary in that political, social and legal theory no longer started out from the idea of the group as a reality (ubi societas ibi ius). It was simply a construction built upon the individual human endowed with natural rights. Political and legal theory thus had to change dramatically since the idea if ubi societas ibi ius no longer sufficed as an explanation of imperium (sovereignty). Political power had to be justified in relation to each individual (Carbasse, Introduction historique au droit, 1998, pp 281–90). Hobbes, Locke and Rousseau developed their own particular versions of social contract theory; but the problem bequeathed to modern legal and political theory is the unsolved tension between imperium and dominium, the latter term being used to mean ‘right’ in the modern power sense. Does the former trump the latter (cf CC, Art 544) or the latter trump the former (Dworkin, Nozick)? This question has been answered only ideologically. § 5 Methodological individualism Much depends on the ontological question. Does society exist or do only individuals exist? Now philosophical methodology equally changed with Ockham in as much as Ockham took a ‘razor’ to the multiplication of these entities (entia non sunt multiplicanda praeter necessitatem). It was necessary to cut one’s way through the mere names and signs in order to arrive at the true ontological foundations of society. What are the basic units in physics, in chemistry, in economics and so on? What is the nature of mathematical entities and the foundational elements used in logic? How does one reconcile the old dichotomy between individual and the State? Is the ‘working class’ a thing or simply a name? What holism and individualism have to offer as methodologies are, then, two ways of ‘seeing’ in turn leading to two different ways of analysis. As Jon Elster has succinctly put it, ‘the explanation of the macro by the micro is preferable to that of the macro by the macro’ since ‘it is always more satisfying to open the black box and to see the cogs of the machine’ (see Laurent, L’individualisme mèthodologique, 1994, p 37). Of course, 128
Legal Method and the Common Law as this black box analogy implies, the individual is not to be taken as an isolated element. The individual is an ‘atom’ that interrelates with other atoms. It is an individual that reacts with, and relates to, other individuals. The individual is thus never to be envisaged within an empty space; (s)he is an ‘atom’ to be seen within an institutional structure which supports a cultural and social collective. And this institutional and cultural context will certainly act as a restraint upon individual action. What the individualist theorists claim, however, is that this social context is only a restraint; it is never the cause. The social group never determines the conditioning and behaviour of the individual. This, needless to say, is what makes methodological individualism so controversial. § 6 Theoretical and methodological dimensions Finally, something must be said about the theoretical context in which rights can be understood and about their role in legal discourse. Rights and duties are fully normative concepts which distinguish themselves from concepts such as ‘interest’ or ‘fault’. These are descriptive concepts (although they often in reality have quasi-normative effects). What gives a right its normative quality? Hohfeld attempted to construct a definitional model in which duty and right are correlative: Mrs Carlill has a right to £100 because the Carbolic Smoke Ball Co is under a duty to pay her the debt. A prisoner does not, on the other hand, have a right to parole since the authorities are not under a duty to grant it; the prisoner has only a privilege. Equally a person is only at liberty to park in a free space in the street, whereas the person who has paid for a particular parking space has a right to use it. However if humans owe duties to animals it would seem to follow that animals have rights. Yet, if they have rights, do they also not have duties? The problem with theories founded simply on linguistic terms is that one can play logical tricks with the terms. This, however, is equally true with the (Roman) structural basis to a right whereby a persona vindicates a res. Both these institutional concepts are empty and thus one can talk of ‘consumer’ rights or a right to parole or a parking space in the street (res). As an advert for cat food once said in the late 1970s: ‘Your cat has the right to eat Whiskers.’ Sic transit gloria mundi. R v Central Independent Television plc [1994] 3 WLR 20 Court of Appeal Hoffmann LJ: There are in the law reports many impressive and emphatic statements about the importance of the freedom of speech and the press. But they are often followed by a paragraph which begins with the word ‘nevertheless’. The judge then goes on to explain that there are other interests which have to be balanced against press freedom. And in deciding upon the importance of press freedom in the particular case, he is likely to distinguish between what he thinks deserves publication in the public interest and things in which the public are merely interested. He may even advert to the commercial motives of the newspaper or television compared with the damage to the public or individual interest which would be caused by publication. The motives which impel judges to assume a power to balance freedom of speech against other interests are almost always understandable and humane on the facts of the particular case before them. Newspapers are sometimes 129
Sourcebook on Obligations and Remedies irresponsible and their motives in a market economy cannot be expected to be unalloyed by considerations of commercial advantage. Publication may cause needless pain, distress and damage to individuals or harm to other aspects of the public interest. But a freedom which is restricted to what judges think to be responsible or in the public interest is no freedom. Freedom means the right to publish things which government and judges, however well motivated, think should not be published. It means the right to say things which ‘right-thinking people’ regard as dangerous or irresponsible. This freedom is subject only to clearly defined exceptions laid down by common law or statute. Furthermore, in order to enable us to meet our international obligations under the Convention for the Protection of Human Rights and Fundamental Freedoms, Cmnd 8969, 1953, it is necessary that any exceptions should satisfy the tests laid down in Art 10(2)… It cannot be too strongly emphasised that outside the established exceptions, or any new ones which Parliament may enact in accordance with its obligations under the Convention, there is no question of balancing freedom of speech against other interests. It is a trump card which always wins… In any area of human rights like freedom of speech, I respectfully doubt the wisdom of creating judge made exceptions, particularly when they require a judicial balancing of interests. The danger about such exceptions is that judges are tempted to use them. The facts of the individual case often seem to demand exceptional treatment because the newspaper’s interest in publication seems trivial and the hurt likely to be inflicted very great. The interests of the individual litigant and the public interest in the freedom of the press are not easily commensurable. It is not surprising that in this case the misery of a five year old girl weighed more heavily with Kirkwood J than the television company’s freedom to publish material which would heighten the dramatic effect of its documentary. This is what one would expect of a sensitive and humane judge exercising the wardship jurisdiction. But no freedom is without cost and in my view the judiciary should not whittle away freedom of speech with ad hoc exceptions. The principle that the press is free from both government and judicial control is more important than the particular case… I would not for a moment dispute…the fact that a right of privacy may be a legitimate exception to freedom of speech. After all, other countries also a party to the Convention have a right of privacy for grown-ups as well. But we do not and there may be room for constitutional argument as to whether in a matter so fundamentally trenching upon the freedom of the press as the creation of a right of privacy, it would not be more appropriate for the remedy to be provided by the legislature rather than the judiciary…
Questions 1 Does this judicial observation represent a new direction in English judicial thinking? 2 Can you detect the influence of any particular legal philosopher in Hoffmann LJ’s comments? 130
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‘Politically conservative members of a former generation would doubtless find it unfamiliar that claims of civic or social right should nowadays be formulated in terms of the private law institution of property. But this merely goes to underline the fact that, in some important sense, all property rights enjoy an inherent public law character’ (Gray, ‘Equitable property’ [1994] CLP 157, p 211). Could one say that the reverse is equally true: all public law ‘expectations’ can be seen as forms of ‘property’? And could not this ‘property’ aspect be translated into ‘rights’? Could the claims of the plaintiffs in Elguzouli-Daf (above, p 93) be seen as ‘rights’ which an English court failed to vindicate? What might the European Court of Human Rights have made of Elguzouli-Daf? (Cf Osman v UK [1999] 1 FLR 193, discussed in Barrett v Enfield LBC, below, p 748.) Rights (and duties, see below) are described as normative concepts because their existence implies obligation: if P has a right, or if D is under a duty, no more is required in the sentence to make it a normative statement. Thus, to say that P has a right to X means that he is entitled to X without further question. Equally, to say that D is under a duty to do X implies that D must do X without further question. These normative concepts thus become central to legal reasoning, since the moment one can construct a legal statement around one or other of them one has gone far in establishing both the reason for a decision and the justification for it. The classic right is, of course, that of ownership—an owner is entitled to vindicate what is his, her or its property without further question. And the Roman law word for ownership was dominium, which implied power over a thing owned (res). Does this mean that all rights are power-conferring concepts? Does an owner have the right to issue orders to all those on his property? What are the constitutional implications of all this? If public law intervenes—for example, to prohibit an owner of a listed building from knocking it down—does this mean that the owner no longer has a ‘right’ over the thing? Is a legislator entitled to revoke any individual right it sees fit to revoke? Does the government have the right to sell public land to a private body? And, if so, will this private buyer have all the rights of an owner over the newly acquired land? What about long established ‘communal rights’ with respect to the land? (it) Duty Donoghue v Stevenson [1932] AC 562 House of Lords (See p 65.) Hyman v Nye (1881) 6 QBD 685 Queen’s Bench Division (Seep 545.) 131
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Is the correlative of a right a duty? In other words, if D is under a duty to pay P £50, does this mean that P has a right to £50? Does a duty have the same history as a right? Did it develop out of the term ius? If owners of vehicles for hire are under a duty to see that they are reasonably fit for their purpose, does this mean that consumers, as a class, have rights? A road user owes a duty of care to other road users. What rights do road users have? Can they enforce any such rights easily?
(b) Quasi-normative concepts (i) Introductory note Legal concepts have been described as ‘knowledge instruments and instruments of expression of a knowledge’ whose main purpose is ‘to provoke the application of appropriate solutions’ and whose origin is both ‘institutional and doctrinal’ (Atias, Épistémologie juridique, 1985, PUF, pp 154–57). Now, a number of institutional concepts such as persona, res, dominium, imperium, contract and the like have already been studied in Chapter 1, and their definition is as much a matter of their place and role in the institutional system as their relationship as words to some ‘reality’. One can go further, and say that institutional concepts (persona and res in particular) go far in creating their own ‘reality’. Thus, just as sociologists can talk of ‘social construction’, so jurists can talk of legal construction’ of facts. When it comes to provoking solutions, a fundamental distinction needs to be made between normative and descriptive concepts. A normative concept, of which ‘right’ and ‘duty’ are the paradigm examples, is capable of provoking a solution in itself. As we have already observed, to say that Mrs Carlill has a right to £100 is a complete normative statement in itself; nothing else needs to be added in order for her to revindicate the debt. Equally, the statement that the Carbolic Smoke Ball Company is under a duty to pay Mrs Carlill £100 is a complete normative statement (although, unlike a right, a duty does need another person or group of persons as an object). A descriptive concept, on the other hand, carries no normative implication on its face. Thus, to say that it is in the ‘commercial interest’ of a tobacco company that a reporting restriction order be obtained in respect of legal proceedings concerning the company does not, of itself, imply that such an order ought to be issued; the concept is merely descriptive. And, being descriptive, such a concept may well have a role and meaning in discourses and disciplines outside of law (for example, in economics and sociology) (Leroux and Marciano, La philosophie économique,
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1998, PUF, pp 15–18). One might also mention, alongside interests, notions such as ‘fault’ and ‘damage’ which are, in theory, merely descriptive. Having said that interest, fault and damage are in theory descriptive, in truth they often play a role that is at once descriptive and normative (Dubouchet, Sémiotique juridique, 1990, PUF, pp 144–45). Thus, to say that D has carelessly caused damage to P is to go far in implying that D ought to compensate P; in other words, the mere juxtaposition of the two descriptive concepts of ‘damage’ and ‘fault’ can endow them both with a quasi-normative character (CC, Art 1382). Some systems require a third descriptive concept, such as ‘interest’ (BGB, § 823) or ‘proximity’ (Caparo Industries plc v Dickman [1990] 2 AC 605) before the required normativity is generated, but the point remains that these descriptive concepts can combine to produce more than the sum of their individual parts. Other useful descriptive concepts are legitimate expectation’ (see, for example, Blackpool and Fylde Aero Club v Blackpool BC, below p 436), ‘control’ (sous sa garde) (CC, Art 1384) and ‘enrichment’ (Swiss CC, Art 62). And what makes them central to legal analysis is that they function at the level of the facts themselves. They emerge out of the facts to act as bridges between the descriptive (fact) and the normative (law) and thus hold the key to the construction of legal solutions: ex facto ius oritur (law arises out of fact). When combined with the institutions of persona, res and actiones— which are, of course, also notions that function at one and the same time at the level of fact and of law—the legal analyst can see how legal facts and their solutions are a matter of legal construction (ex iure factum oritur) (out of law fact arises). (ii) Interests Miller v Jackson [1977] QB 966 Court of Appeal (See p 51.) Burris v Azadani [1995] 1 WLR 1372 Court of Appeal (See p 278.) Sir Thomas Bingham MR:… Neither statute nor authority in my view precludes the making of an ‘exclusion zone’ order. But that does not mean that such orders should be made at all readily, or without very good reason. There are two interests to be reconciled. One is that of the defendant. His liberty must be respected up to the point at which his conduct infringes, or threatens to infringe, the rights of the plaintiff. No restraint should be placed on him which is not judged to be necessary to protect the rights of the plaintiff. But the plaintiff has an interest which the court must be astute to protect. The rule of law requires that those whose rights are infringed should seek the aid of the court, and respect for the legal process can only suffer if those who need protection fail to get it. That, in part at least, is why disobedience to orders of the court has always earned severe
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Sourcebook on Obligations and Remedies punishment. Respect for the freedom of the aggressor should never lead the court to deny necessary protection to the victim. Schiemann LJ: I agree with the judgment delivered by Sir Thomas Bingham MR. As he points out, there are in these cases two interests to be reconciled— that of the plaintiff not to be harassed and that of the defendant to be allowed to move freely along the highway. An exclusion zone order interferes with the latter in order to secure the former. On its face it forbids what are lawful actions. The defendant has rendered himself liable to such an order because of his previous harassing behaviour. Nonetheless, a judge imposing such an order must be careful not to interfere with the defendant’s rights more than is necessary in order to protect the plaintiffs.
Questions 1
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‘Where a local authority consider it expedient for the promotion or protection of the interests of the inhabitants of their area…they may prosecute…any legal proceedings…’ (Local Government Act 1972, s 222(1)). Does this statute recognise that the inhabitants are a kind of persona? Is an interest playing the role of a right in Miller v Jackson? ‘Now it is certainly true that consumer, worker and environmental interests are not to be found directly in traditional legal science. Yet the object of Roman legal science was—as is quite specifically stated in the Digest itself— public and private interests (utilitas) and when this notion is associated with the Roman institution of the legal subject (persona) it can be seen that the recognition of new social realities in modern law does not require any new epistemological discourse as such. The recognition by the law of new interests is simply the application of a traditional scientific structure (persona and utilitas) to new social circumstances’ (Samuel and Rinkes, Law of Obligations and Legal Remedies, 1996, Cavendish Publishing, p 66). To what extent can this empirical interest relationship be used as a means of creating class rights? (Cf Jolowicz [1983] CLJ 222.)
Notes 1
Having looked at the various key elements and relationships in the institutional structure of law, attention should finally be given to one of the key concepts that features in a number of different roles within the model. This is the notion of an Interest’, a concept that acts as a ‘passport’ to all areas of the law (Ost, Droit et intérêt: Vol 2—entre droit et non-droit: l’intérêt, 1990, Facultés Saint-Louis, pp 10–11). Thus Interest’ can be seen as a means of access to the whole spectrum of public and private law, not just in England, but in Europe in general. Interest is, thus, a central concept for the comparative lawyer.
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Interests and persons. Persons (personae) have interests and these are given expression as part of personality itself. Accordingly, children have their own interests which can be used to trump those of others (see, for example, CC, Art 388–2) and all humans might be said to have interests that are both subjective (reputation, dignity and the like: for example, CC, Art 16– 3) and objective (Airedale NHS v Bland [1993] AC 789; In re S, p 281). Indeed, each person has his own mass of interests (CC, Arts 117, 232). What makes them particularly valuable as a legal notion is that interest can become a means of giving expression to a ‘person’ who has not as yet been endowed with physical or legal existence. Thus, one can talk of the interests of unborn children or even future generations (see p 32). One might observe, in this respect, how ‘best interests’ assumed a central mediating role, with a supposedly moral dimension, in the Tony Bland case (Airedale, above). The judges constructed a ‘virtual’ fact in turning the unconscious Bland into a non-persona (like an unborn child) whose best Interest’ then acted as the object of the legal decision (cf Py, La mort et le droit, 1997, PUF, pp 27–29). One can also use interest to give a class of persons such as the family (CC, Arts 220–1, 264–1), consumers, or more fragmented groups with an interest thus endowing them with a kind of legal personality (Jolowicz [1983] CLJ 222). Legal (corporate) persons have ‘commercial interests’ which can act as the object of legal protection, although this may give rise to conflict with other interests, if not rights. Public interest. Private interests are often contrasted with the general or the public interest. Thus imprévision in French contract law differs as between public and private law contracts since the courts must take account of the ‘general interest’ when deciding a problem of public law (CE 30.3.1916; D 1916.3.25). Often, cases can be made to turn on the conflict between public and private interests and when this happens, the notion of an interest becomes a means of giving expression to the community vis à vis the individual (see, for example, Miller v Jackson, above). Public interest can also be used to give expression to certain constitutional ‘rights’ or, indeed, as a reason for limiting such ‘rights’ (see, for example, Camelot plc v Centaur Communications Ltd [1999] QB 124). Property interests. Interest can also attach to the res. Thus, in English land law, ‘rights’ in land belonging to another are expressed in terms of interests and different kinds of losses can be analysed via different types of interest. For example, damages in English contract law are said to protect three different types of interest—expectation, reliance and restitution (Surrey CC v Bredero Homes Ltd, below, p 295). And in tort law, some argue that the whole objective of this category can be reduced to protecting interests of one kind or another (see, for example, Cane, Tort Law and Economic Interests, 2nd edn, 1996, OUP). Interest can be seen as the empirical foundation of a ‘right’ and, although it cannot obviously be synonymous with such a normative concept, interest is often used as 135
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the basis for granting a remedy and thus erecting a right (Samuel and Rinkes, Law of Obligations and Legal Remedies, 1996, Cavendish Publishing, pp 66–68, 83–90). In contrast, the distinction between (legitimate) interest and right lies at the heart of the civilian principle of an abuse of a right. Animals, it seems, also have interests (Animals (Scientific Procedures) Act 1986, s5(3)(c)). Actions and interests. The notion of an ‘interest’ is also important in the law of actions in that it is used to determine the standing of a legal subject (persona) in relation to the entitlement to bring a legal action. This is particularly important in public law, where individuals can sue for judicial review only if they have a ‘sufficient interest’ in the matter (Supreme Court Act 1981, s 31(3)). And such a rule applies equally to private law in most civilian systems (see, for example, NCPC Art 31; CC, Art 184). No doubt in English law all plaintiffs have to have a legitimate interest before they are entitled to pursue an action (Jolowicz (1990) 9 CJQ 262); but often this requirement is masked by more substantive ideas such as ‘duty of care’ in tort. Some kinds of harm, in other words, will not entitle a person even to get an action off the ground. This standing question has become particularly acute when ‘more and more frequently the complexity of modern societies generates situations in which a single human action can be beneficial or prejudicial to large numbers of people, thus making entirely inadequate the traditional scheme of litigation as merely a twoparty affair’ (Cappelletti, The Judicial Process in Comparative Perspective, 1989, OUP, p 271). The law of actions is accordingly an area dealing with fundamental questions about access to justice. The notion of an interest is a key notion which acts not only as a control device, but as a defining focal point for giving expression to the function of legal claims and legal procedure (see, for example, Control of Misleading Advertisements Regulations 1988, reg 6(1), (3)). (iii) Proximity Caparo Industries plc v Dickman [1990] 2 AC 605 House of Lords Lord Oliver:… ‘Proximity’ is, no doubt, a convenient expression so long as it is realised that it is no more than a label which embraces not a definable concept but merely a description of circumstances from which, pragmatically, the courts conclude that a duty of care exists. Marc Rich and Co v Bishop Rock Marine Co Ltd [1996] 1 AC 211 House of Lords (See p 711.) Lord Steyn:… Counsel for the cargo-owners argued that the present case involved the infliction of direct physical loss. At first glance the issue of directness may seem a matter of terminology rather than substance. In truth 136
Legal Method and the Common Law it is a material factor. The law more readily attaches the consequences of actionable negligence to directly inflicted physical loss than to indirectly inflicted physical loss… Attia v British Gas plc [1988] QB 304 Court of Appeal (See p 519.)
Questions 1 2 3
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What is the relationship, if any, between the concepts of proximity and duty? Can they be compared? Is proximity a notion that is ever of relevance in the law of contract? P suffers an invasion of an interest by the act of a proximate person: is this ever, in itself, enough to give rise to a right to damages? If not, what more must be shown? Is ‘directness’ of damage an essential ingredient of the tort of trespass? (Cf Harriett v Bond [1925] AC 669; Esso v Southport, p 216.) Swinney v Chief Constable of Northumbria [1997] QB 464 Court of Appeal This was an action for damages for personal injury and loss brought against the police by two plaintiffs who had been severely threatened and intimidated by an alleged criminal. The plaintiffs had given confidential information about the alleged criminal to the police, but their names and address had, so they claimed, been carelessly left in a police car which had then been broken into, allowing their names and address to end up in the hands of the alleged criminal. The police unsuccessfully applied to have the action struck out. Hirst LJ: This is an appeal by the defendant, the Chief Constable of the Northumbria Police Force, from the order of Laws J dated 24 January 1995, whereby he ordered that the appeal of the plaintiffs against the order of District Judge Lancaster striking out the plaintiffs’ claim be allowed. The application to strike out was made under RSC Ord 18 r 19 on the footing that the case disclosed no reasonable cause of action. By virtue of Ord 18 r 19(2) no evidence is admissible on the application and the only material for consideration by the court is the facts as pleaded in the statement of claim, on the assumption (which, of course, may or may not be borne out in the end) that they are true. Furthermore it is, of course, an elementary principle that it is only appropriate to strike out if the defendant establishes beyond peradventure that the plaintiffs would be bound to fail at the trial should the case proceed. So long as the case is arguable, it must be allowed to go ahead. The grounds of attack on the present pleading are twofold. First, that the pleaded facts are incapable of founding a duty of care owed by the police to the plaintiffs, so that no cause of action in negligence is disclosed; secondly, in the alternative, that even if it is arguable that the facts would establish a cause of action in negligence so as to give rise to a duty of care, the chief constable would have an unanswerable defence to the claim based on public policy. It is not in dispute, for the purposes only of the present application,
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Sourcebook on Obligations and Remedies that on the pleaded facts, if made out, there is a viable case that harm to the plaintiffs was reasonably foreseeable… However, in my judgment, Mr Powell [counsel for the plaintiff] is right in his ably presented submissions that at least arguably this case falls into the Dorset Yacht category rather than the Hill category on proximity… This seems to me to show that it is at least arguable that a special relationship did exist, which renders the plaintiffs distinguishable from the general public as being particularly at risk. In my judgment, Alexandrou v Oxford [1993] 4 All ER 328 is arguably distinguishable because there was no element of confidentiality in that case, when that element looms so large in the present case. Thus the first ground put forward by Mr Gompertz [counsel for the defendant], namely the attack on the judge’s conclusions on proximity, fails. I now turn to the second issue, that of public policy… Mr Gompertz submitted that the Hill case [1989] AC 53 established that the police are immune from liability for negligence in the investigation of crime, at least where the harm to the plaintiff is caused by a third party, save where the police have assumed a responsibility to the plaintiff. He pointed out that the principle applies whether the alleged negligence relates to policy or operations. The reasons for the rule, to be drawn from Lord Keith of Kinkel’s speech in the Hill case are, he said, that police resources should not be diverted from their essential public function in the pursuit of criminals in order to defend private actions at law, and that this is particularly pertinent when the claim is that the police have failed to save the plaintiff from harm caused by third parties: moreover, imposition of a civil liability might lead to an unduly defensive frame of mind among police officers investigating crime. He submitted that liability for the acts of third parties arising from the loss of documents, in circumstances comparable to the present, would place an intolerable burden on police officers, the CPS and counsel to ensure that confidential documents are always kept in a safe or in personal custody. Thus, the overwhelming public interest lies in ensuring that, providing the police act in good faith they should be able to operate without constantly having to consider whether, with the benefit of hindsight, their actions might give rise to civil liability. He criticised Laws J’s Janus analogy on the ground that in reality there was no conflict between the two strands of public policy identified by Laws J, since the police were not seeking voluntarily to disclose the identity of the informant. In summary, Mr Gompertz contended the Hill case [1989] AC 53, and the ensuing cases, lay down a fundamental principle of public policy that there is a blanket immunity’ (his words) for police officers in relation to their activities in the investigation or suppression of crime. The only exception which he was prepared to recognise was if, in the circumstances of the present case, the police had deliberately broken the plaintiffs’ confidence and disclosed the information, since it would be unthinkable that public policy would countenance such misconduct. But his exception did not extend to inadvertent disclosure, which he contended fell into a quite different category and was covered by the blanket immunity. Finally he said that it was impossible, in the circumstances of the present case, to attribute to the police an assumption of responsibility since they were merely the recipients of information handed over to them by the plaintiffs. 138
Legal Method and the Common Law I am unable to accept these submissions substantially for the reasons advanced by Mr Powell. The Hill case [1989] AC 53 is, of course, one of cardinal importance. As was held in the Alexandrou case [1993] 4 All ER 328 and in the Osman case [1993] 4 All ER 344, it lays down a principle of general application which was not specifically limited to the actual facts of that particular case, and nothing I say should be interpreted as in any shape or form seeking to undermine that principle. However, in my judgment, that principle cannot be completely divorced from the circumstances highlighted by Lord Keith of Kinkel in his judgment, which recurred mutatis mutandis in the Osman case and in the Elguzouli-Daf case [1995] QB 335. It follows that I cannot accept Mr Gompertz’s submission that the police have a blanket immunity which gives them a complete answer in the present case. As Laws J pointed out in his judgment, there are here other considerations of public policy which also have weight, namely, the need to preserve the springs of information, to protect informers, and to encourage them to come forward without an undue fear of the risk that their identity will subsequently become known to the suspect or to his associates. In my judgment, public policy in this field must be assessed in the round, which in this case means assessing the applicable considerations advanced in the Hill case [1989] AC 53, which are, of course, of great importance, together with the considerations just mentioned in relation to informers, in order to reach a fair and just decision on public policy. Mr Powell invited us to hold that most of the considerations advanced in the Hill case did not apply here. I prefer not to express any view on that either way without fuller knowledge of the facts. Suffice it to say that, if all the relevant aspects of public policy referred to above are considered in the round, it is in my judgment at least arguable that the immunity should not apply here. I also consider that it is at least arguable in the present case that, on the facts pleaded on the statement of claim, including the texts of the two messages quoted, the police did, in fact, assume a responsibility of confidentiality to the plaintiffs, or at least to the first plaintiff. If that view should prevail, it would bring into play the exception identified by this court in the ElguzouliDaf case [1995] QB 335. It follows that I reject Mr Gompertz’s submission on the second ground also. I wish to end this judgment by stressing a point with which I began, namely that I am upholding no more than the arguability of the plaintiffs’ case on these two grounds. It by no means follows that they will succeed on either of them at the trial. Nor, for that matter, does it follow that the plaintiffs will establish, when all the evidence is considered, the necessary substratum of fact as pleaded in the statement of claim on which their whole case depends. However, for all these reasons I would dismiss this appeal. Peter Gibson LJ: This case, to my mind, exemplifies the difficulty facing a defendant who seeks to strike out pleadings against him on the ground provided for by RSC Ord 18 r 19(1)(a), that the pleadings disclose no reasonable cause of action. The court is obliged to treat the facts averred in the statement of claim as true, notwithstanding that difficulties of proof may be obvious, and no other evidence is admissible. Accordingly, we must
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Sourcebook on Obligations and Remedies accept what is pleaded, and the relevant pleadings which Hirst LJ has already recited. It is to be noted that there is nothing pleaded as to why the document recording the confidential information was placed and left in the vehicle which was broken into, and we therefore do not know whether the police were in the course of investigating or suppressing crime when they went in that vehicle with that document to the place where the vehicle was parked on 8 April 1991… The general immunity which Mr Gompertz asserted was…as he accepted, subject to an exception. He did not dispute that where there is deliberate disclosure by the police of confidential information imparted by that informant to the police, the police will not be immune. But he sought to distinguish such a case from the case where there has been a negligent disclosure of the confidential information. For my part, I have difficulty in seeing why the police should be immune in such a case on the ground of public policy, regardless of whether or not the police were, at the time of the negligence, investigating or suppressing crime. But whether or not this is right, it seems to me that the judge was justified in taking the view that in a case of this sort the important public policy considerations asserted by the police must be balanced against the other public policy considerations to which I have referred, and that the appropriate time to do the balancing is at the trial, when all the facts are known to the court… Ward LJ: I can summarise my reasons very shortly. The plaintiffs must establish only that it is arguable that they have a good cause of action. It seems to me that it is indeed properly arguable that (1) the risk of theft of the documents from the police car is foreseeable, it being conceded that the harm to the plaintiffs in consequence of the theft is also foreseeable; (2) there is a special relationship between the plaintiffs and the defendant, which is sufficiently proximate: proximity is shown by the police assuming responsibility, and the plaintiffs relying upon that assumption of responsibility, for preserving the confidentiality of the information which, if it fell into the wrong hands, was likely to expose the first plaintiff and members of her family to a special risk of damage from the criminal acts of others, greater than the general risk which ordinary members of the public must endure with phlegmatic fortitude; (3) it is fair, just and reasonable that the law should impose a duty, there being no overwhelming dictate of public policy to exclude the prosecution of this claim. On the one hand, there is, as is more fully set out in Hill v Chief Constable of West Yorkshire [1989] AC 53, p 63, an important public interest that the police should carry out their difficult duties to the best of their endeavours without being fettered by, or even influenced by, the spectre of litigation looming over every judgment they make, every discretion they exercise, every act they undertake or omit to perform, in their ceaseless battle to investigate and suppress crime. The greater public good rightly outweighs any individual hardship. On the other hand, it is incontrovertible that the fight against crime is daily dependent upon information fed to the police by members of the public, often at real risk of villainous retribution from the criminals and their associates. The public interest will not accept that good citizens should be expected to entrust information to the police, without also expecting that they are entrusting their safety to the police. The public interest would be affronted were it to be 140
Legal Method and the Common Law the law that members of the public should be expected, in the execution of public service, to undertake the risk of harm to themselves without the police, in return, being expected to take no more than reasonable care to ensure that the confidential information imparted to them is protected. The welfare of the community at large demands the encouragement of the free flow of information without inhibition. Accordingly, it is arguable that there is a duty of care, and that no consideration of public policy precludes the prosecution of the plaintiffs’ claim, which will be judged on its merits later. I would accordingly also dismiss the appeal.
Notes and questions 1
2
This case does not decide that the police were negligent and thus liable to the plaintiffs. It simply decides that the police have a case to answer. (In fact it was subsequently held that the police were not liable.) Many of the great negligence cases, including Donoghue v Stevenson itself (p 65), are striking out claims and this is why it could be defamatory to say, for example, that the Home Office was held liable for negligence in Dorset Yacht (p 645). It was not. The issue in Donoghue and Dorset Yacht was this: assuming the defendant (or its employee) to have been careless and the plaintiff to have suffered damage as a result, could the defendant nevertheless escape liability on the basis that there was no legal duty of care owed to the plaintiff? This is a question of law and it arises for decision when a defendant seeks to stop a legal action going any further by applying for the claim to be struck out for abuse of process. It is often said that it was never proved that there was a snail in the bottle of ginger beer; this is because the case never actually went to trial (freeman v Home Office (No 2) [1984] QB 524, pp 555–56). If a defendant fails in a striking out action, the case is often settled out of court. Could striking out claims ever be a means of infringing human rights? (Cf Barrett v Enfield LBC, p 748.) The main quasi-normative concept in play in Swinney is ‘proximity’. But is it also a case about ‘interests’? Would you classify the case as one of public, or private law? (iv) Damage Khorasandjian v Bush [1993] QB 727 Court of Appeal This was an action by a daughter, living in her parents’ home, for an interlocutory injunction to prevent threatening phone calls from an exboyfriend. Dillon LJ:… To my mind, it is ridiculous if in this present age the law is that the making of deliberately harassing and pestering telephone calls to a person is only actionable in the civil courts if the recipient of the calls happens to have the freehold or a leasehold proprietary interest in the premises in which he or she has received the calls. Miss Harry Thomas submits, however, that 141
Sourcebook on Obligations and Remedies English law does not recognise any tort of harassment or invasion of privacy or, save in the different context of such a case as Rookes v Barnard [1964] AC 1129, intimidation. Therefore, she says that, save as expressly conceded as set out above, the defendant’s conduct to the plaintiff is, even on the plaintiffs version of it, under the English civil law, legitimate conduct of which the plaintiff has no power or right to complain. I apprehend that it is correct, historically, that the tort of private nuisance, which originated as an action on the case, was developed in the beginning to protect private property or rights of property, in relation to the use or enjoyment of land. It is stated in Clerk and Lindsell on Torts, 16th edn, 1989, p 1354, para 24–01, that ‘the essence of nuisance is a condition or activity which unduly interferes with the use or enjoyment of land’. That a legal owner of property can obtain an injunction, on the ground of private nuisance, to restrain persistent harassment by unwanted telephone calls to his home was decided by the Appellate Division of the Alberta Supreme Court in Motherwell v Motherwell (1976) 73 DLR (3d) 62… Rose LJ: I agree with the judgment of Dillon LJ. Peter Gibson J (dissenting):… For my part, to the extent that Scott J was holding that there is now a tort of unreasonable harassment, with all respect to him, I cannot agree with him. There is no tort of harassment (Patel v Patel [1988] 2 FLR 179, p 182, per Waterhouse J) and I do not think that the addition of the adjective ‘unreasonable’ would convert harassing conduct into tortious conduct… I know of no authority which would allow a person with no interest in land or right to occupy land to sue in private nuisance. Given that the purpose of an action in nuisance is to protect the right to use and enjoyment of land (see Salmond and Heuston on the Law of Torts, 20th edn, 1992, p 67), it seems to me to be wrong in principle if a mere licensee or someone without such right could sue in private nuisance… Protection from Harassment Act 1997 (c 40) 1
Prohibition of harassment (1)
A person must not pursue a course of conduct(a) (b)
(2)
(3)
which amounts to harassment of another, and which he knows or ought to know amounts to harassment of the other.
For the purposes of this section, the person whose course of conduct is in question ought to know that it amounts to harassment of another if a reasonable person in possession of the same information would think the course of conduct amounted to harassment of the other. Subsection (1) does not apply to a course of conduct if the person who pursued it shows(a)
that it was pursued for the purpose of preventing or detecting crime,
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Legal Method and the Common Law (b) (c) 3
Civil remedy (1) (2)
7
that it was pursued under any enactment or rule of law or to comply with any condition or requirement imposed by any person under any enactment, or that in the particular circumstances the pursuit of the course of conduct was reasonable.
An actual or apprehended breach of section 1 may be the subject of a claim in civil proceedings by the person who is or may be the victim of the course of conduct in question. On such a claim, damages may be awarded for (among other things) any anxiety caused by the harassment and any financial loss resulting from the harassment…
Interpretation of this group of sections (1) (2) (3) (4)
This section applies for the interpretation of sections 1 to 5. Reference to harassing a person includes alarming the person or causing the person distress. A ‘course of conduct’ must involve conduct on at least two occasions. ‘Conduct’ includes speech.
Hunter v Canary Wharf Ltd [1997] AC 655 Court of Appeal and House of Lords This case concerned two damages actions for nuisance brought by groups of plaintiffs. In both cases the plaintiffs were unsuccessful with regard to the two main preliminary issues of law to reach the House of Lords (Lord Cooke dissenting in part). The facts are set out in Lord Goff’s judgment. In the Court of Appeal the question was also raised as to whether a deposit of dust could amount to ‘damage’ for the purposes of the tort of negligence. Lord Goff: My Lords, there are before your Lordships’ House appeals in two actions, which raise fundamental questions relating to the law of private nuisance. In the first action, Hunter v Canary Wharf Ltd, the appellant plaintiffs claim damages in respect of interference with the television reception at their homes. This, they claim, was caused by the construction of the Canary Wharf Tower, which was built on land developed by the defendants. The tower is nearly 250 metres (about 800 feet) high and over 50 metres square. The source of television transmissions in the area is a BBC transmitter at Crystal Palace; and the plaintiffs claim that, because of its size and the metal in its surface (it has stainless steel cladding and metallised windows), it has caused interference with the television signals from Crystal Palace. The plaintiffs all lived at the material time in an area on the Isle of Dogs affected by the interference, which has been called ‘the shadow area’. They claim that the interference began in 1989, during the construction of the tower. A relay transmitter was then built to overcome the problem of interference in the shadow area. This came into operation in April 1991, and it is claimed that the aerials at the plaintiffs’ homes were adjusted or replaced between July 1991 and April 1992 to achieve satisfactory reception. The plaintiffs claim 143
Sourcebook on Obligations and Remedies damages in respect of the interference with their television reception during the intervening period. Their claim was framed in nuisance and in negligence, though their claim in negligence has since been abandoned. In the second action, Hunter v London Docklands Development Corpn, the respondent plaintiffs claim damages in respect of damage caused by what they claim to be excessive amounts of dust created by the construction by the defendants of a road 1,800 metres in length, known as the Limehouse Link Road, which was constructed by the defendants between November 1989 and May 1993. The plaintiffs are residents in the affected area, and they advanced their claims in negligence and nuisance and under the rule in Rylands v Fletcher (1868) LR 3 HL 330, though this last head of claim has been abandoned. In both actions, Judge Fox-Andrews QC made orders for the trial of a number of preliminary issues of law. Of the issues of law in the first action, two have survived to reach your Lordships’ House, viz (1) whether interference with television reception is capable of constituting an actionable nuisance, and (2) whether it is necessary to have an interest in property to claim in private nuisance and, if so, what interest in property will satisfy this requirement. In the second action, the only issue to reach your Lordships’ House is the latter of these two issues. The preliminary issues in the two actions were considered by Judge Havery QC at separate hearings. In respect of the two issues in the first action, he held (1) that interference with television reception is capable of constituting an actionable nuisance, but (2) that a right of exclusive possession of land is necessary to entitle a person to sue in private nuisance. He later held that his answer on the second issue was applicable in the case of the same issue in the second action. The Court of Appeal, ante, pp 662Gff, reversed the decision of Judge Havery on both issues, holding (1) that the creation or presence of a building in the line of sight between a television transmitter and other properties is not actionable as an interference with the use and enjoyment of land, but (2) that occupation of property as a home provided a sufficiently substantial link to enable the occupier to sue in private nuisance. The plaintiffs in the first action now appeal to your Lordships’ House against the first of these answers, and the defendants in both actions appeal or cross-appeal against the second. Interference with television signals I turn first to consider the question whether interference with television signals may give rise to an action in private nuisance. This question was first considered over 30 years ago by Buckley J in Bridlington Relay Ltd v Yorkshire Electricity Board [1965] Ch 436. That case was concerned not with interference caused by the presence of a building, but with electrical interference caused by the activities of the defendant electricity board. Buckley J held that such interference did not constitute a legal nuisance, because it was interference with a purely recreational facility, as opposed to interference with the health or physical comfort or well being of the plaintiffs. He did not however rule
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Legal Method and the Common Law out the possibility that ability to receive television signals free from interference might one day be recognised as ‘so important a part of an ordinary householder’s enjoyment of his property that such interference should be regarded as a legal nuisance’: p 447. Certainly, the average weekly hours for television viewing in this country, which your Lordships were told were 24 hours per week, show that many people devote much of their leisure time to watching television, even allowing for the fact that it is not clear whether the relevant statistic is based more on the time when television sets are turned on, rather than being actually watched. Certainly, it can be asserted with force that for many people television transcends the function of mere entertainment, and in particular that for the aged, the lonely and the bedridden it must provide a great distraction and relief from the circumscribed nature of their lives. That interference with such an amenity might in appropriate circumstances be protected by the law of nuisance has been recognised in Canada, in Nor-Video Services Ltd v Ontario Hydro (1978) 84 DLR (3d) 221, p 231. However, as I see the present case, there is a more formidable obstacle to this claim. This is that the complaint rests simply upon the presence of the defendants’ building on land in the neighbourhood as causing the relevant interference. The gravamen of the plaintiffs’ case is that the defendants, by building the Canary Wharf Tower, interfered with the television signals and so caused interference with the reception on the plaintiffs’ television sets; though it should not be overlooked that such interference might be caused by a smaller building and moreover that, since it is no defence that the plaintiff came to the nuisance, the same complaint could result from the simple fact of the presence of the building which caused the interference. In this respect the present case is to be distinguished from the Bridlington Relay case, in which the problem was caused not just by the presence of a neighbouring building but by electrical interference resulting from the defendant electricity board’s activities. As a general rule, a man is entitled to build on his own land, though nowadays this right is inevitably subject to our system of planning controls. Moreover, as a general rule, a man’s right to build on his land is not restricted by the fact that the presence of the building may of itself interfere with his neighbour’s enjoyment of his land. The building may spoil his neighbour’s view…in the absence of an easement, it may restrict the flow of air on to his neighbour’s land…and, again in the absence of an easement, it may take away light from his neighbour’s windows…nevertheless his neighbour generally cannot complain of the presence of the building, though this may seriously detract from the enjoyment of his land…From this it follows that, in the absence of an easement, more is required than the mere presence of a neighbouring building to give rise to an actionable private nuisance. Indeed, for an action in private nuisance to lie in respect of interference with the plaintiff’s enjoyment of his land, it will generally arise from something emanating from the defendant’s land. Such an emanation may take many forms—noise, dirt, fumes, a noxious smell, vibrations, and suchlike. Occasionally activities on the defendant’s land are in themselves so offensive to neighbours as to constitute an actionable nuisance, as in Thompson-Schwab v Costaki [1956] 1 WLR 335, where the sight of prostitutes and their clients entering and leaving
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Sourcebook on Obligations and Remedies neighbouring premises were held to fall into that category. Such cases must however be relatively rare… It is of some interest that the same conclusion has been reached in German law. I refer in particular to the decision of the Bundesgerichtshof in G v City of Hamburg, 21 October 1983; Decisions of the Federal Supreme Court in Civil Matters, Vol 88, p 344. The facts of the case were very similar to the present case. The plaintiffs were the owners of their family home. The local municipality erected a nine-storey hospital on a neighbouring site, and as a result there was significant interference with television reception in the plaintiffs’ house, making it impossible for them to receive certain programmes. The plaintiffs’ claim for damages against the municipality failed. Nothing was emitted from the defendants’ land, and the so called ‘negative Immissionen’ (negative effects) which resulted in interference with the plaintiffs’ television reception gave rise to no cause of action. It was stated that the court, by the adoption of the settled jurisprudence of the Reichsgericht, had repeatedly affirmed that the so called ‘negative adverse effects’ caused by interference with access to natural amenities like light and air are not ‘impermissible’ within the meaning of the relevant provisions of the Civil Code. Within the boundaries of his land the owner may in principle deal with his property as he wishes. That decision demonstrates that English law is not alone in reaching this conclusion. The German principle appears to arise from the fact that the appropriate remedy falls within the law of property, in which competing property rights have to be reconciled with each other. In English law liability falls, for historical reasons, within the law of torts, though the underlying policy considerations appear to be similar. In the result I find myself to be in agreement on this point with Pill LJ, who delivered the judgment of the Court of Appeal, ante, pp 662Gff, when he expressed the opinion, p 666E-F, that no action lay in private nuisance for interference with television caused by the mere presence of a building… For these reasons I would dismiss the appeal of the plaintiffs in the first action on this issue. Right to sue in private nuisance I turn next to the question of the right to sue in private nuisance. In the two cases now under appeal before your Lordships’ House, one of which relates to interference with television signals and the other to the generation of dust from the construction of a road, the plaintiffs consist in each case of a substantial group of local people. Moreover they are not restricted to householders who have the exclusive right to possess the places where they live, whether as freeholders or tenants, or even as licensees. They include people with whom householders share their homes, for example as wives or husbands or partners, or as children or other relatives. All of these people are claiming damages in private nuisance, by reason of interference with their television viewing or by reason of excessive dust. Judge Havery held that the right to sue in private nuisance did not extend to include so wide a class of plaintiffs, but was limited to those with a right to
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Legal Method and the Common Law exclusive possession of the relevant property. His decision on this point was however reversed by the Court of Appeal… The basic position is, in my opinion, most clearly expressed in Professor Newark’s classic article on The boundaries of nuisance’ (1949) 65 LQR 480 when he stated, p 482, that the essence of nuisance was that ‘it was a tort to land. Or to be more accurate it was a tort directed against the plaintiff’s enjoyment of rights over land…’. The historical origin of the tort lay in the fact that: Disseisina, transgressio and nocumentum [nuisance] covered the three ways in which a man might be interfered with in his rights over land. Wholly to deprive a man of the opportunity of exercising his rights over land was to disseise him, for which he might have recourse to the assize of novel disseisin. But to trouble a man in the exercise of his rights over land without going so far as to dispossess him was a trespass or a nuisance according to whether the act was done on or off the plaintiff’s land [p 481]. Later, when distinguishing cases of personal injury, he stated, pp 488–89: In true cases of nuisance the interest of the plaintiff which is invaded is not the interest of bodily security but the interest of liberty to exercise rights over land in the amplest manner. A sulphurous chimney in a residential area is not a nuisance because it makes householders cough and splutter but because it prevents them taking their ease in their gardens. It is for this reason that the plaintiff in an action for nuisance must show some title to realty. Finally, he proclaimed four theses which should be nailed to the doors of the Law Courts and defended against all comers. The first was that: The term “nuisance” is properly applied only to such actionable user of land as interferes with the enjoyment by the plaintiff of rights in land.’ There are many authoritative statements which bear out this thesis of Professor Newark… Since the tort of nuisance is a tort directed against the plaintiff’s enjoyment of his rights over land, an action of private nuisance will usually be brought by the person in actual possession of the land affected, either as the freeholder or tenant of the land in question, or even as a licensee with exclusive possession of the land… It was however established, in Foster v Warblington Urban District Council [1906] 1 KB 648, that, since jus tertii is not a defence to an action of nuisance, a person who is in exclusive possession of land may sue even though he cannot prove title to it… Subject to this exception, however, it has for many years been regarded as settled law that a person who has no right in the land cannot sue in private nuisance. For this proposition, it is usual to cite the decision of the Court of Appeal in Malone v Laskey [1907] 2 KB 141… The decision in Malone v Laskey on nuisance has since been followed in many cases… Recently, however, the Court of Appeal departed from this line of authority in Khorasandjian v Bush [1993] QB 727, a case which I must examine with some care…
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Sourcebook on Obligations and Remedies … If a plaintiff, such as the daughter of the householder in Khorasandjian v Bush, is harassed by abusive telephone calls, the gravamen of the complaint lies in the harassment which is just as much an abuse, or indeed an invasion of her privacy, whether she is pestered in this way in her mother’s or her husband’s house, or she is staying with a friend, or is at her place of work, or even in her car with a mobile phone. In truth, what the Court of Appeal appears to have been doing was to exploit the law of private nuisance in order to create by the back door a tort of harassment which was only partially effective in that it was artificially limited to harassment which takes place in her home. I myself do not consider that this is a satisfactory manner in which to develop the law, especially when, as in the case in question, the step so taken was inconsistent with another decision of the Court of Appeal, viz Malone v Laskey [1907] 2 KB 141, by which the court was bound. In any event, a tort of harassment has now received statutory recognition: see the Protection from Harassment Act 1997. We are therefore no longer troubled with the question whether the common law should be developed to provide such a remedy. For these reasons, I do not consider that any assistance can be derived from Khorasandjian v Bush by the plaintiffs in the present appeals. It follows that, on the authorities as they stand, an action in private nuisance will only lie at the suit of a person who has a right to the land affected. Ordinarily, such a person can only sue if he has the right to exclusive possession of the land, such as a freeholder or tenant in possession, or even a licensee with exclusive possession. Exceptionally however, as Foster v Warblington Urban District Council shows, this category may include a person in actual possession who has no right to be there; and in any event a reversioner can sue in so far his reversionary interest is affected. But a mere licensee on the land has no right to sue. The question therefore arises whether your Lordships should be persuaded to depart from established principle, and recognise such a right in others who are no more than mere licensees on the land. At the heart of this question lies a more fundamental question, which relates to the scope of the law of private nuisance. Here I wish to draw attention to the fact that although, in the past, damages for personal injury have been recovered at least in actions of public nuisance, there is now developing a school of thought that the appropriate remedy for such claims as these should lie in our now fully developed law of negligence, and that personal injury claims should be altogether excluded from the domain of nuisance. The most forthright proponent of this approach has been Professor Newark, in his article The boundaries of nuisance’ (1949) 65 LQR 480, from which I have already quoted. Furthermore, it is now being suggested that claims in respect of physical damage to the land should also be excluded from private nuisance: see, for example, the article by Mr Conor Gearty on The place of private nuisance in a modern law of torts’ [1989] CLJ 214. In any event, it is right for present purposes to regard the typical cases of private nuisance as being those concerned with interference with the enjoyment of land and, as such, generally actionable only by a person with a right in the land. Characteristic examples of cases of this kind are those concerned with noise, vibrations, noxious smells and the like. The two appeals with which your Lordships are here concerned arise from actions of this character.
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Legal Method and the Common Law For private nuisances of this kind, the primary remedy is in most cases an injunction, which is sought to bring the nuisance to an end, and in most cases should swiftly achieve that objective. The right to bring such proceedings is, as the law stands, ordinarily vested in the person who has exclusive possession of the land. He or she is the person who will sue, if it is necessary to do so. Moreover he or she can, if thought appropriate, reach an agreement with the person creating the nuisance, either that it may continue for a certain period of time, possibly on the payment of a sum of money, or that it shall cease, again perhaps on certain terms including the time within which the cessation will take place. The former may well occur when an agreement is reached between neighbours about the circumstances in which one of them may carry out major repairs to his house which may affect the other’s enjoyment of his property. An agreement of this kind was expressly contemplated by Fletcher Moulton LJ in his judgment in Malone v Laskey [1907] 2 KB 141, p 153. But the efficacy of arrangements such as these depends upon the existence of an identifiable person with whom the creator of the nuisance can deal for this purpose. If anybody who lived in the relevant property as a home had the right to sue, sensible arrangements such as these might in some cases no longer be practicable. Moreover, any such departure from the established law on this subject, such as that adopted by the Court of Appeal in the present case, faces the problem of defining the category of persons who would have the right to sue. The Court of Appeal adopted the not easily identifiable category of those who have a ‘substantial link’ with the land, regarding a person who occupied the premises ‘as a home’ as having a sufficient link for this purpose. But who is to be included in this category? It was plainly intended to include husbands and wives, or partners, and their children, and even other relatives living with them. But is the category also to include the lodger upstairs, or the au pair girl or resident nurse caring for an invalid who makes her home in the house while she works there? If the latter, it seems strange that the category should not extend to include places where people work as well as places where they live, where nuisances such as noise can be just as unpleasant or distracting. In any event, the extension of the tort in this way would transform it from a tort to land into a tort to the person, in which damages could be recovered in respect of something less serious than personal injury and the criteria for liability were founded not upon negligence but upon striking a balance between the interests of neighbours in the use of their land. This is, in my opinion, not an acceptable way in which to develop the law. It was suggested in the course of argument that at least the spouse of a husband or wife who, for example as freeholder or tenant, had exclusive possession of the matrimonial home should be entitled to sue in private nuisance. For the purposes of this submission, your Lordships were referred to the relevant legislation, notably the Matrimonial Homes Act 1983 and the Family Law Act 1996. I do not however consider it necessary to go through the statutory provisions. As I understand the position, it is as follows. If under the relevant legislation a spouse becomes entitled to possession of the matrimonial home or part of it, there is no reason why he or she should not be able to sue in private nuisance in the ordinary way. But I do not see how a spouse who has no interest in the matrimonial home has, simply by virtue of his or her
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Sourcebook on Obligations and Remedies cohabiting in the matrimonial home with his or her wife or husband whose freehold or leasehold property it is, a right to sue. No distinction can sensibly be drawn between such spouses and other cohabitees in the home, such as children, or grandparents. Nor do I see any great disadvantage flowing from this state of affairs. If a nuisance should occur, then the spouse who has an interest in the property can bring the necessary proceedings to bring the nuisance to an end, and can recover any damages in respect of the discomfort or inconvenience caused by the nuisance. Even if he or she is away from home, nowadays the necessary authority to commence proceedings for an injunction can usually be obtained by telephone. Moreover, if the other spouse suffers personal injury, including injury to health, he or she may, like anybody else, be able to recover damages in negligence. The only disadvantage is that the other spouse cannot bring an independent action in private nuisance for damages for discomfort or inconvenience. It follows that, with all respect, I do not feel able to follow the decision on this point by the majority of the Court of Appeal of New Brunswick in Devon Lumber Co Ltd v MacNeill (1987) 45 DLR (4th) 300, preferring as I do the dissenting judgment of Rice JA in that case… Since preparing this opinion, I have had the opportunity of reading in draft the speech of my noble and learned friend, Lord Cooke of Thorndon, and I have noticed his citation of academic authority which supports the view that the right to sue in private nuisance in respect of interference with amenities should no longer be restricted to those who have an interest in the affected land. I would not wish it to be thought that I myself have not consulted the relevant academic writings. I have, of course, done so as is my usual practice; and it is my practice to refer to those which I have found to be of assistance, but not to refer, critically or otherwise, to those which are not. In the present circumstances, however, I feel driven to say that I found in the academic works which I consulted little more than an assertion of the desirability of extending the right of recovery in the manner favoured by the Court of Appeal in the present case. I have to say (though I say it in no spirit of criticism, because I know full well the limits within which writers of textbooks on major subjects must work) that I have found no analysis of the problem; and in circumstances such as this, a crumb of analysis is worth a loaf of opinion. Some writers have uncritically commended the decision of the Court of Appeal in Khorasandjian v Bush [1993] QB 727, without reference to the misunderstanding in Motherwell v Motherwell (1976) 73 DLR (3d) 62, on which the Court of Appeal relied, or consideration of the undesirability of making a fundamental change to the tort of private nuisance to provide a partial remedy in cases of individual harassment. For these and other reasons, I did not, with all respect, find the stream of academic authority referred to by my noble and learned friend to be of assistance in the present case. For all these reasons, I can see no good reason to depart from the law on this topic as established in the authorities. I would therefore hold that Khorasandjian v Bush must be overruled in so far as it holds that a mere licensee can sue in private nuisance, and I would allow the appeal or cross-appeal of the defendants in both actions and restore the order of Judge Havery on this issue.
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Legal Method and the Common Law Lord Lloyd:… Like, I imagine, all your Lordships, I would be in favour of modernising the law wherever this can be done. But it is one thing to modernise the law by ridding it of unnecessary technicalities; it is another thing to bring about a fundamental change in the nature and scope of a cause of action. It has been said that an actionable nuisance is incapable of exact definition. But the essence of private nuisance is easy enough to identify, and it is the same in all three classes of private nuisance, namely, interference with land or the enjoyment of land… If the occupier of land suffers personal injury as a result of inhaling the smoke, he may have a cause of action in negligence. But he does not have a cause of action in nuisance for his personal injury, nor for interference with his personal enjoyment. It follows that the quantum of damages in private nuisance does not depend on the number of those enjoying the land in question. It also follows that the only persons entitled to sue for loss in amenity value of the land are the owner or the occupier with the right to exclusive possession… I can well understand Dillon LJ’s concern to find a remedy for the wife or daughter who suffers from harassment on the telephone, whether at home or elsewhere. But to allow them a remedy in private nuisance would not just be to extend the existing law. It would not just be to get rid of an unnecessary technicality. It would be to change the whole basis of the cause of action. For the reasons given by Peter Gibson LJ in his dissenting judgment in Khorasandjian v Bush, with which I agree, I would hold that that case was wrongly decided, and should be overruled… On the first point I would allow the appeal, and answer the question in the same manner as Judge Havery. I need add very little on the second point, since I agree with the unanimous decision of the Court of Appeal that interference with television reception is not capable of constituting an actionable private nuisance... Lord Hoffmann:... Is there any reason of policy why the rule should be abandoned? Once nuisance has escaped the bounds of being a tort against land, there seems no logic in compromise limitations, such as that proposed by the Court of Appeal in this case, requiring the plaintiff to have been residing on land as his or her home. This was recognised by the Court of Appeal in Khorasandjian v Bush [1993] QB 727 where the injunction applied whether the plaintiff was at home or not. There is a good deal in this case and other writings about the need for the law to adapt to modern social conditions. But the development of the common law should be rational and coherent. It should not distort its principles and create anomalies merely as an expedient to fill a gap. The perceived gap in Khorasandjian v Bush was the absence of a tort of intentional harassment causing distress without actual bodily or psychiatric illness. This limitation is thought to arise out of cases like Wilkinson v Downton [1897] 2 QB 57 and Janvier v Sweeney [1919] 2 KB 316. The law of harassment has now been put on a statutory basis (see the Protection from Harassment Act 1997) and it is unnecessary to consider how the common law might have developed. But as at present advised, I see no reason why a tort of intention
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Sourcebook on Obligations and Remedies should be subject to the rule which excludes compensation for mere distress, inconvenience or discomfort in actions based on negligence: see Hicks v Chief Constable of the South Yorkshire Police [1992] 2 All ER 65. The policy considerations are quite different. I do not therefore say that Khomsandjian v Bush was wrongly decided. But it must be seen as a case on intentional harassment, not nuisance… Lord Cooke (dissenting in part): My Lords, having had the privilege of reading in draft the opinions of the other four members of your Lordships’ Committee in these cases, I begin my own contribution by respectfully acknowledging that they achieve a major advance in the symmetry of the law of nuisance. Being less persuaded that they strengthen the utility or the justice of this branch of the common law, I am constrained to offer an approach which, although derived from concepts to be found in those opinions, would lead to principles different in some respects. Naturally I am diffident about disagreeing in any respect with the majority of your Lordships, but such assistance as I may be able to give in your deliberations could not consist in mere conformity and deference; and, if the common law of England is to be directed into the restricted path which in this instance the majority prefer, there may be some advantage in bringing out that the choice is in the end a policy one between competing principles… In Khorasandjian v Bush, Dillon and Rose LJJ thought that, if the wife of the owner is entitled to sue in respect of harassing telephone calls, the same should apply to a child living at home with her parents. I agree. The persistent ringing of the telephone may be a nuisance in fact to all occupants of the home, not any primary target only, and all members of the family living there should be entitled to redress in law for substantial disturbance of their amenity. It has been recognised in jurisdictions other than England and Canada that continual telephoning to a house may be a nuisance: see, for instance, Stoakes v Bn/dges [1958] QWN 5 and Wiggins v Moskins Credit Clothing Store (1956) 137 F Supp 764. I share the disposition to think that harassment by telephone calls or otherwise should also be actionable when it occurs outside the home; but that is surely no reason for denying relief in nuisance when it or any other form of serious disturbance of amenity occurs within the home… In logic more than one answer can be given. Logically it is possible to say that the right to sue for interference with the amenities of a home should be confined to those with proprietary interests and licensees with exclusive possession. No less logically the right can be accorded to all who live in the home. Which test should be adopted, that is to say which should be the governing principle, is a question of the policy of the law. It is a question not capable of being answered by analysis alone. All that analysis can do is expose the alternatives. Decisions such as Malone v Laskey [1907] 2 KB 141 do not attempt that kind of analysis, and in refraining from recognising that value judgments are involved they compare less than favourably with the approach of the present day Court of Appeal in Khorasandjian and this case. The reason why I prefer the alternative advocated with unwonted vigour of expression by the doyen of living tort writers is that it gives better effect to widespread conceptions concerning the home and family…
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Legal Method and the Common Law Turning to the television action, I am in the happier position of being able to agree with all your Lordships and the Court of Appeal that this cannot succeed. Television has become a significant and, to many, almost an indispensable amenity of domestic life. For the reasons given more fully by Robins J in Nor-Video Services Ltd v Ontario Hydro (1878) 84 DLR (3d) 221 and my noble and learned friend Lord Goff, I agree that, in appropriate cases, television and radio reception can and should be protected by the law of nuisance, although no doubt rights to reception cannot be acquired by prescription. Inhabitants of the Isle of Dogs and many another concentrated urban area might react with incredulity, and justifiably so, to the suggestion that the amenity of television and radio reception is fairly comparable to a view of the surroundings of their homes. Neither in nature nor in value is that so. It may be suspected that only a lawyer would think of such a suggestion. What in my opinion must defeat an action for interference with television reception by the construction of a building, not only in this but in most cases, is the principle of reasonable user, of give and take. The 1983 decision in Germany of the Federal Supreme Court to which Lord Goff refers, G v City of Hamburg, Decisions of the Federal Supreme Court in Civil Matters, Vol 88, p 344 rejected a claim by neighbours, whose television reception of certain programmes had been spoilt by the erection of a nine-storey hospital, to connect their aerial to the system in the defendants’ building. In the translation available to your Lordships the essential ground of the decision appears thus, p 348: In respect of the so called negative adverse effects there is no gap in the [Civil] Code; on the contrary, it deliberately leaves it to the freedom of the owner to use his property as he wishes within the framework of the Code, as long as he does not cross the boundary of neighbouring land by the emission of imponderables. Although turning on the Code, that is of interest as a matter of comparative law and some help… The Canary Wharf project in general, and the tower at One Canada Square in particular, were obviously of a scale totally transforming the environment. There was an original planning condition that building heights were not to exceed 120 feet except by agreement with the enterprise zone authority. Agreements were obtained and it is not suggested that they were insufficient for what was done. Under the fast track procedure the rights of residents were limited to the making of representations regarding the project. It may be that what seems plain with hindsight, that there would be a dramatic effect on television reception, was not at first sufficiently realised. After a year or so, however, the problem was rectified by the establishment of a relay station and adjustment of the aerials of affected properties (apparently without cost to the owners). Although this was presumably the result, not of representations under the statutory procedure, but of subsequent complaints, it does show that the right to make representations is not necessarily without real value. The tower is clad in stainless steel and the windows are metallised but it would seem hopeless to contend that the use of these materials and the design of the tower constituted any unreasonable or unexpected mode of constructing a building of this height. In these circumstances, to adopt the 153
Sourcebook on Obligations and Remedies words of Staughton LJ in Wheeler v JJ Saunders Ltd, p 30, the tower falls fairly within the scope of ‘a strategic planning decision affected by considerations of public interest’… For these reasons, while not satisfied that a categorical universally applicable answer can be given to the issue about television reception, I agree that in this case the claim of nuisance consisting of interference with such reception cannot succeed; but I would dismiss the appeal from the Court of Appeal’s ruling that occupation of a property as a home provides a sufficiently substantial link to enable the occupier to sue in private nuisance, to the extent that the ruling relates to interference with amenities as distinct from injury to the land. Lord Hope:… In my opinion the decision in Khomsandjian v Bush [1993] QB 727 is open to criticism because the majority who adopted the same approach as that taken in Motherwell v Motherwell (1976) 73 DLR (3d) 62—a decision which I think, with respect, is equally flawed on this ground—failed to apply the general rule of law, noted by Peter Gibson J, p 745A, that only an owner or occupier of the property affected can maintain an action for private nuisance. The interlocutory order which was made in that case and was held on appeal to have been worded appropriately was in the widest terms. It restrained the defendant from ‘using violence to, harassing, pestering or communicating with’ the plaintiff. It was so widely drawn that it covered the defendant’s conduct wherever he happened to be when making the unwanted telephone calls and wherever the plaintiff happened to be when she received them. Its use of language demonstrates that the case was concerned with the invasion of the privacy of the plaintiffs person, not the invasion of any interest which she might have had in any land. I would be uneasy if it were not possible by some other means to provide such a plaintiff with a remedy. But the solution to her case ought not to have been found in the tort of nuisance, as her complaint of the effects on her privacy of the defendant’s conduct was of a kind which fell outside the scope of the tort… Pill LJ (Court of Appeal):… Lord Irvine [counsel for the defendants] submits that there must be damage in the sense of a physical change in property as a necessary ingredient of a cause of action in negligence… In the absence of physical damage, a mere deposit is not actionable. For the purpose of question 7, Mr Brennan [for the plaintiffs] does not submit that economic loss is sufficient and the court is not invited to consider that question. His submission is that the deposit of dust, subject to the de minimis principle, amounts to damage in the ordinary sense of the word because it impairs the utility of the object onto which the dust is deposited. He equates impairment of utility with damage. In my judgment, the deposit of dust is capable of giving rise to an action in negligence. Whether it does depends on proof of physical damage and that depends on the evidence and the circumstances. Dust is an inevitable incident of urban life and the claim arises on the assumption that the defendants have caused ‘excessive’ deposits. Reasonable conduct and a reasonable amount of cleaning to limit the ill-effects of dust can be expected of householders. Subject to that, if, for example, in ordinary use the excessive deposit is trodden into
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Legal Method and the Common Law the fabric of a carpet by householders in such a way as to lessen the value of the fabric, an action would lie. Similarly, if it follows from the effects of excessive dust on the fabric that professional cleaning of the fabric is reasonably required, the cost is actionable and if the fabric is diminished by the cleaning that too would constitute damage. Excessive dust might also be shown to have damaged electrical apparatus and there could no doubt be many other examples. The damage is in the physical change which renders the article less useful or less valuable. On the assumptions we are invited to make, that rather than any general concept of loss of utility is the appropriate test. In the circumstances, I do not propose to consider whether the cost of preventive measures would be recoverable. I agree with Lord Irvine that the fact it costs money or labour to remove a deposit of material on property does not necessarily involve a finding that the property has been damaged. I also agree with him that the meaning attributed to the word damage in a criminal statute may be different from that in the law of negligence.
Notes and questions 1
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3
4
5 6
Can abusive telephone calls ever amount to a form of assault? Why can such calls, however mild, not be seen as a form of trespass if they cause damage? An animal rights group advises sympathisers to telephone, late at night, various individuals said to be involved in experiments on animals. Can any of the individuals obtain an injunction against the group to stop them advising sympathisers to telephone? What if the group advised its sympathisers to telephone only during office hours? The tendency of the English law of obligations is to classify damage into various kinds: (a) personal injury; (b) physical damage to property; (c) economic loss; (d) nervous shock; (e) mental distress; and (f) interference with the use and enjoyment of property. Under what heading would you classify the damage in Khorasandjian? Does the mere invasion of one of these interests entitle the person whose interest has been invaded to a remedy? If not, what more must be shown? Could the plaintiff in Khorasandjian have obtained damages to compensate her for the harm suffered? Can Khorasandjian be justified on the basis of Wilkinson v Downton (see p 640)? Does the House of Lords confirm this? If the facts of Wilkinson v Downton arose again today, would the plaintiff be entitled to damages under the 1997 Act? Is interference with television reception a form of damage recognised by the law? Is the contamination of land by radioactive material physical damage to property? (Cf Blue Circle Industries plc v MOD [1999] 2 WLR 295.)
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7
A bottle of orange juice explodes just as a customer in a supermarket is lifting it out of his trolley at the cash desk. The customer is uninjured, but his clothes are covered in orange juice. Do you think that the customer has suffered any damage, over and above the cost of cleaning the clothes? 8 What is the focal point of an action for private nuisance: the persona or the res? 9 A firm of solicitors specialising in defamation is hired by D to threaten one of D’s employees who has complained to the police about D sexually harassing her. The solicitors send a number of letters to the employee stating that the employee’s complaint to the police amounts to defamation and that unless she withdraws her complaint and apologises to D she will be sued for ‘six figure damages’. The employee suffers severe mental anxiety as a result of these solicitors’ letters. Can the employee sue the solicitors and/or D for damages (a) at common law; or (b) under the 1997 Act? Would your answer be different if the solicitors were aware that previous employees had tried to complain about being sexually harassed by D? 10 Can a group of employees harass their employer for better working conditions and/or higher wages?
(v) Interests and damage Linden Gardens Ltd v Lenesta Sludge Disposals Ltd [1994] AC 85 House of Lords Lord Bridge:… I cannot accept that in a contract of this nature, namely for work, labour and the supply of materials, the recovery of more than nominal damages for breach of contract is dependent upon the plaintiff having a proprietary interest in the subject matter of the contract at the date of the breach. In everyday life contracts for work and labour are constantly being placed by those who have no proprietary interest in the subject matter of the contract. To take a common example, the matrimonial home is owned by the wife and the couple’s remaining assets are owned by the husband and he is the sole earner. The house requires a new roof and the husband places a contract with a builder to carry out the work. The husband is not acting as agent for his wife, he makes the contract as principal because only he can pay for it. The builder fails to replace the roof properly and the husband has to call in and pay another builder to complete the work. Is it to be said that the husband has suffered no damage because he does not own the property? Such a result would in my view be absurd and the answer is that the husband has suffered loss because he did not receive the bargain for which he had contracted with the first builder and the measure of damages is the cost of securing the performance of that bargain by completing the roof repairs properly by the second builder.
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Legal Method and the Common Law Darlington BC v Wiltshier Northern Ltd [1995] 1WLR 68 Court of Appeal (See p 459.)
Questions 1 2
3
4
Is the law in effect treating the family as a legal person? In the example given by Lord Bridge, could the wife sue the builder who fails to replace the roof properly? (Cf Beswick v Beswick, p 249.) What kind of damage does the wife suffer: physical or economic? What if the builder, while replacing the roof, managed to set fire to the house: could the husband and the wife sue the builder for the mental distress they suffer at seeing the family house burn down? ‘In the Lenesta Sludge case…the House made available a remedy as a matter of law to solve the problem of transferred loss in the case before them’ (Lord Goff in White v Jones [1995] 2 AC 207, p 268). Discuss.
7 LAW AND FACT (a) Questions of law and questions of fact Qualcast (Wolverhampton) Ltd v Haynes [1959] AC 743 House of Lords (See p 13.)
Notes and questions 1
2
‘It is not the less a fact because that fact involves some knowledge or relation of law. There is hardly any fact which does not involve it. If you state that a man is in possession of an estate of £10,000 a year, the notion of possession is a legal notion, and involves knowledge of law; nor can any other fact in connection with property be stated which does not involve such knowledge of law’ (Jessel MR in Eaglesfield v Marquis of Londonderry (1876) 4 Ch D 693, p 703). Is proximity a question of fact? Is damage a question of fact? ‘It is said, “Ignorantia juris haud excusat” [ignorance of the law never excuses]; but in that maxim the word “jus” is used in the sense of denoting general law, the ordinary law of the country. But when the word “jus” is used in the sense of denoting a private right, that maxim has no application. Private right of ownership is a matter of fact; it may be the result also of a matter of law; but if parties contract under a mutual mistake and misapprehension as to their relative and respective rights, the result is, that that agreement is liable to be set aside as having proceeded upon a 157
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3
4
common mistake’ (Lord Westbury in Cooper v Phibbs (1867) LR 2 HL 149, p 170). What is meant by ‘private right’? Is this not a question of law? P is able to prove that, but for D’s negligent failure to diagnose the correct medical condition, he would have had a 25% chance of recovery. In losing this 25% has P lost something that can be classified as damage? Is this a question of fact or law? (Cf McGhee v NCB [1973] 1 WLR 1; Wilsher v Essex AHA [1988] AC 1074.) ‘ZThe distinction [between mistake of fact and mistake of law]…does not turn upon the fact that the person making the payment could not have discovered the true state of affairs about the law any more than about the facts. It turns upon the purely abstract proposition that in principle (and leaving aside the problem of Schrödinger’s cat) the truth or falsity of any proposition of existing fact could have been ascertained at the time, whereas the law, as it was subsequently declared to have been, could not’ (Lord Hoffmann in Kleinwort Benson Ltd v Lincoln CC [1998] 3 WLR 1095, p 1138). B buys, and takes possession of, a consignment of drugs from S, both parties honestly, but mistakenly, believing that the drugs are not illegal. Can S sue B for the price? Can he sue B for the return of the drugs or their value?
(b) Establishing the facts Re H and Others (Minors) [1996] 1 All ER 1 House of Lords Lord Nicholls:… The general principle is that he who asserts must prove. Generally, although there are exceptions, a plaintiff or applicant must establish the existence of all the preconditions and other facts entitling him to the order he seeks… Where the matters in issue are facts the standard of proof required in noncriminal proceedings is the preponderance of probability, usually referred to as the balance of probability. This is the established general principle… The balance of probability standard means that a court is satisfied an event occurred if the court considers that, on the evidence, the occurrence of the event was more likely than not. When assessing the probabilities the court will have in mind as a factor, to whatever extent is appropriate in the particular case, that the more serious the allegation the less likely it is that the event occurred and, hence, the stronger should be the evidence before the court concludes that the allegation is established on the balance of probability. Fraud is usually less likely than negligence. Deliberate physical injury is usually less likely than accidental physical injury… Evidence is the means whereby relevant facts are proved in court. What the evidence is required to establish depends upon the issue the court has to decide. At some interlocutory hearings, for instance, the issue will be whether the plaintiff has a good arguable case. The plaintiff may assert he is at risk of 158
Legal Method and the Common Law the defendant trespassing on his land or committing a breach of contract and that, in consequence, he will suffer serious damage. When deciding whether to grant an interlocutory injunction the court will not be concerned to resolve disputes raised by the parties’ conflicting affidavit evidence. At trials, however, the court normally has to resolve disputed issues of relevant fact before it can reach its conclusion on the issue it has to decide. This is a commonplace exercise, carried out daily by courts and tribunals throughout the country. This exercise applies as much where the issue is whether an event may happen in the future as where the issue is whether an event did or did not happen in the past. To decide whether a car was being driven negligently, the court will have to decide what was happening immediately before the accident and how the car was being driven and why. Its finding on these facts form the essential basis for its conclusion on the issue of whether the car was being driven with reasonable care. Likewise, if the issue before the court concerns the possibility of something happening in the future, such as whether the name or get-up under which goods are being sold is likely to deceive future buyers. To decide that issue the court must identify and, when disputed, decide the relevant facts about the way the goods are being sold and to whom and in what circumstances. Then, but only then, can the court reach a conclusion on the crucial issue. A decision by a court on the likelihood of a future happening must be founded on a basis of present facts and the inferences fairly to be drawn therefrom… Ward v Tesco Stores Ltd [1976] I WLR 810 Court of Appeal Lawton LJ: This is an appeal by the defendants from a judgment of his Honour Judge Nance given in the Liverpool County Court…whereby he adjudged that the plaintiff should recover against the defendants £178.50 damages and her costs…for personal injuries said to have been caused by the negligence of the defendants in the maintenance of the floor in their supermarket at Smithdown Road, Liverpool… The plaintiff went round the store, carrying a wire basket, as shoppers are expected to do in supermarkets. She was doing her shopping at the back of the store when she felt herself slipping. She appreciated that she was slipping on something which was sticky. She fell to the ground, and sustained minor injuries. She had not seen what had caused her to slip. It was not suggested… that she had in any way been negligent in failing to notice what was on the floor as she walked along doing her shopping. When she was picking herself up she appreciated that she had slipped on some pink substance which looked to her like yoghourt. It was yoghourt. Later, somebody on the defendants’ staff found a carton of yoghourt in the vicinity which was two-thirds empty… That is all the plaintiff was able to prove, save for one additional fact. About three weeks later when she was shopping in the same store she noticed that some orange squash had been spilt on the floor. She kept an eye on the spillage for about a quarter of an hour. During that time nobody came to clear it up. The trial judge was of the opinion that the facts which I have related constituted a prima facie case against the defendants. I infer that this case, which involves only a small amount of damages, has been brought to this court because the defendants are disturbed that any judge should find that a
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Notes and questions 1 2 3
Does Ward actually lay down a rule? If so, what is the rule? Why do the judges differ in Ward: is it because the majority focus on the operational system and the dissenting judge on the actual yoghourt? Where the balance of probabilities is equally weighted, ought the court to
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find for the plaintiff or the defendant? Could it not be argued that where there is an equal balance of probabilities the risk should be on the defendant rather than the plaintiff? (Cf McGhee v NCB [1973] 1 WLR 1.) If Mrs Ward had been injured by an exploding bottle of lemonade in the supermarket, could she have sued them in contract? If not, why not? The relevant events took place in the course of a few seconds; all or some of them were seen by 12 different witnesses…and, as is inevitable when honest witnesses give their recollections of what occurred in a very brief space of time there were wide divergences in their respective accounts. In such a case an appellate court will not lightly disturb the findings of the trial judge as to what in fact occurred’ (Diplock LJ in Wooldridge v Sumner [1963] 2 QB 43, p 60). Is the court under a duty to attempt to establish the truth? If not, what is its duty with respect to the facts? Does Ward v Tesco indicate that facts are much more important than law in the law of obligations?
(c) Legal categorisation of the facts Lockett v A and M Charles Ltd [1938] 4 All ER 170 King’s Bench This was an action for damages by Mr and Mrs Lockett against a restaurant in respect of food poisoning caught from the whitebait hors d’oeuvre. Mr Lockett had paid the bill. Tucker J:… With regard to the female plaintiffs position in respect of breach of warranty, every proprietor of a restaurant is under a duty to take reasonable care to see that the food which he supplies to his guests is fit for human consumption. If he does not take such reasonable steps, and if he is negligent, a person who buys the food which he supplies can recover damages from him based on his negligence. As, however, there is no allegation of such negligence in this case, it must be assumed that the proprietor of the hotel and his servants could not be at fault in any way, and either plaintiff can recover only if he or she establishes that there was a contract between him or her and the proprietor of the hotel… Counsel for the plaintiffs is, in my opinion, right when he submits that, when persons go into a restaurant and order food, they are making a contract of sale in exactly the same way as they are making a contract of sale when they go into a shop and order any other goods. I think that the inference is that the person who orders the food in a hotel or restaurant prima facie makes himself or herself liable to pay for it, and when two people—whether or not they happen to be husband and wife—go into a hotel and each orders and is supplied with food, then, as between those persons and the proprietor of the hotel, each of them is making himself liable for the food which he orders, whatever may be the arrangement between the two persons who are eating at the hotel. On the facts in this case, it is, in my opinion, right to hold that there was a contract implied by the conduct of the parties between the plaintiff,
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How does this case differ from Donoghue v Stevenson (p 65)? Why was Donoghue not a contract case? ‘To attribute a label (qualification) is, from the formal point of view, to practise an act of classification. The class under consideration can be defined by objective describers and the labelling is then of a factual order (“this animal is male or female, this mass is liquid or solid…”). In a great many cases the describers are fuzzy and imply an appreciation which can itself be a matter of dispute… The legal domain offers good examples of where the categorisation is executed from explicit norms which nevertheless leave much room for argument. The labelling of a prohibited act by the law defines the court before which its author is going to be brought as well as the margin of punishment that he incurs… The categorisation is an argument since it operates in order to determine the decision of the judge or the jury. But it is also the consequence of an argument: it is the analysis of facts and the putting of them into contact with the legal texts which are going to determine the categorisation’ (Oléron, L’argumentation, 4th edn, 1996, PUF, pp 88–90). Do cases like Lockett indicate that categories such as ‘contract’ are more fluid than they might first appear? What is the relationship between the categorisation of facts and the operation of the syllogism? Is logic as secure as it seems or can it be undermined by the process of categorisation? (Cf Harbour Assurance Ltd v Kansa, p 185.) The goal of the sciences is a description as accurate as possible of facts… But facts are never evident. They never directly thrust themselves upon one, and it can be said that they exist neither a priori nor separately. Facts have sense only in relation to a system of thought, through a pre-existing theory…’ (Astolfi and Develay, La didactique des sciences, 1989, PUF, pp 25, p 27). Does one have to know the law applicable before one can categorise the facts? How would you classify the facts in Lockett: as contractual, tortious, sale of goods or consumer protection? Do you think the facts disclose a criminal offence?
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Financings Ltd v Stimson [1962] 1 WLR 1184 Court of Appeal (See p 492.) Notes and questions 1 Would you classify the facts of this case as falling within the chapter on the formation of a contract or within a chapter dealing with rescission for mistake? 2 ‘Either there is a situation of isomorphy (lex clara est), that is, correspondence between the norm and the case, or else there is a situation of doubt which calls for interpretation in the strict sense; in this case directives of interpretation are needed, and the choice among them implies further evaluations’ (Bengoetxea, The Legal Reasoning of the European Court of Justice, 1993, OUP, p 130). Was there any doubt as to the rule applicable in Stimson? What about Fisher v Bell (above, p 24)?
(d) Role of quasi-normative concepts Beswick v Beswick [1966] Ch 538 Court of Appeal (See also pp 78, 249.) Lord Denning MR:… The general rule undoubtedly is that ‘no third person can sue, or be sued, on a contract to which he is not a party’; but at bottom that is only a rule of procedure. It goes to the form of remedy, not to the underlying right. Where a contract is made for the benefit of a third person who has a legitimate interest to enforce it, it can be enforced by the third party in the name of the contracting party or jointly with him or, if he refuses to join, by adding him as a defendant. In that sense, and it is a very real sense, the third person has a right arising by way of contract. He has an interest which will be protected by law… It is different when a third person has no legitimate interest, as when…he is seeking to rely, not on any right given to him by the contract, but on an exemption clause… Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council [1990] 1 WLR 1195 Court of Appeal (Seep 436.) Bingham LJ:… [I]f he submits a conforming tender before the deadline he is entitled, not as a matter of mere expectation but of contractual right, to be sure that his tender will after the deadline be opened and considered… Had the club, before tendering, inquired of the council whether it could rely on any timely and conforming tender being considered along with others, I feel quite sure that the answer would have been ‘of course’. The law would, I think, be defective if it did not give effect to that.
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Contrast Lord Denning’ s judgment with the decision of the House of Lords in Beswick v Beswick (see p 249). Did they find fault with this technique used by Lord Denning? Can you isolate the various legal concepts employed by Lord Denning and by Bingham LJ? How do they get from the world of fact to the world of law? ‘…The reflections of jurists on the relationship between fact and law can also be brought to bear on the way in which the law ought to take in fact. Several difficulties are to be faced here… In the first place, the jurist can hardly study the facts without seeing them through a pre-qualification. In the second place, the incessant coming and going from fact to law which permits him progressively to arrive at the best qualification available is evidently not independent of the opinion that he has on the just solution in the case. In the third place, the function of the categorisation is not to describe reality, but to subject it to the most appropriate legal regime… Consequently, the difficulty of the work of categorisation consists in finding the balance between the consideration of fact and the objective to be promoted in law’ (Atias, Épistémologie juridique, 1985, PUF, p 129). Do the approaches of Lord Denning and Bingham LJ support this view of legal method? Is Bingham LJ using facts to change the law? Are the facts being discussed by Bingham LJ actual facts? If not, are they being invented by the court? And, if so, is such invention an important aspect of legal reasoning?
(e) Utilisation of hypothetical facts to determine the law Samuel, G, The Foundations of Legal Reasoning 1994, Maklu, pp 193–195 (footnotes omitted) The notion of ‘what if?’ is…something that binds Roman and English law. What if one person lights a fire on his property, leaving another person to look after it, and the fire gets out of control and spreads to a neighbour’s property? Who should be liable? What if the lease prohibited the lighting of fires? What if the person who failed to control it had a history of falling asleep on the job? What about a farmer who lights a fire to burn off the stubble in his field and the fire spreads to a neighbour’s farm? Does it make any difference if it is a windy day or not? What if a carpenter, while working in another’s house, goes out for a while leaving the house unguarded and a thief enters? These kinds of question are to be found in the Corpus Iuris and in the All England Law Reports and while the jurists in both systems are prepared to induce out of these ‘what if?’ factual situations some general propositions, these propositions, in Roman law at least, were usually just a technique for explaining some further factual point. They were not designed to be part of a process for the construction of a deductive model of legal propositions… 164
Legal Method and the Common Law Accordingly, despite the occasional flights into generalisation, it can perhaps be said that on the whole English law continues to share the same interpretative closeness to the facts as the Roman law of the classical and medieval eras and this means that the technique of ‘what if?’ could be a useful device for understanding the operation of institutions in both systems. Legal development is not a matter of inducing rules, terms or institutions out of a number of factual situations and applying these rules, terms or institutions to new factual situations. Rather it is a matter of pushing outwards from within the facts themselves. It is a matter of moving from one res, say a public highway, to another res like private property and seeing the extent to which the relationships between the various institutions themselves create a new normative situation. Legal development, in other words, is a matter of expanding the facts.
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Are all the cases following Donoghue v Stevenson (above, p 65) examples of pushing outwards from a bottle of ginger beer? The Romans, like the modern English jurist, seem to have reasoned at the level of fact. Indeed they often used the expression ‘what if?’ (quid enim s 1 …?). Yet it was the Roman lawyers who developed the institutional system which rigidly distinguished between public and private law and between property and obligations. Is there a contradiction here? Why do the English jurists seem much less interested in systematics? ‘[Imagination] contributes to the fulfilment of theorising through the hypothetical variation of specific factual situations so as to bring out the essential core and borderlines of legal ideas. What is crucial here is imagination’s capacity for conjuring up and holding fast to an infinity of hypothetical situations which present exemplifications of legal problems and doctrines both as if they were actual and under the governance of the operationalism principle of legal ideas… Imagination allows both judges and theorists to both make available and explore the nature and limits of legal ideas qua ideas. For example, in legal education we frequently take the facts of a decided case and ask students to reflectively consider, on a “what if?” basis, a series of imaginative variations…’ (Salter, ‘Towards a phenomenology of legal thinking’ (1992) 23 Journal of the British Society for Phenomenology 167, p 172). Are Roman and common lawyers phenomenologists? Are facts simply ideas? ‘Much of the strength of Roman law is due to the fact that it is both rooted in actuality and linked to procedure. It contrived to avoid the patchiness of a purely casuistic system because, rather like professors of law in the United States when teaching with the method that Socrates used in conversation with slaves, the jurists hypothetically varied the actual facts of the situations presented to them, and considered what the legal effect of such hypothetical variations would be’ (Weir, ‘Contracts in Rome and 165
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England’ (1992) 66 Tulane LR 1615, pp 1616–17). Do common lawyers reason in the same way as the classical Roman lawyers? Blackpool and Fylde Aero Club Ltd v Blackpool Borough Council [1990] 1 WLR 1195 Court of Appeal (See p 436.) Bingham LJ:… During the hearing the questions were raised: what if, in a situation such as the present, the council had opened and thereupon accepted the first tender received, even though the deadline had not expired and other invitees had not yet responded? Or if the council had considered and accepted a tender admittedly received well after the deadline? [Counsel for the defendant] answered that although by so acting the council might breach its own standing orders, and might fairly be accused of discreditable conduct, it would not be in breach of any legal obligation because at that stage there would be none to breach. This is a conclusion I cannot accept. And if it were accepted there would in my view be an unacceptable discrepancy between the law of contract and the confident assumptions of commercial parties… Re Rowland [1963] Ch 1 Court of Appeal Lord Denning MR (dissenting):… I decline…to ask myself: what do the words mean to a grammarian? I prefer to ask: What did Dr Rowland and his wife mean by the word ‘coincide’ in their wills? When they came to make their wills it is not difficult to piece together the thoughts that ran through their minds. The doctor might well say: ‘We are going off for three years to these far off places and in case anything happens to either of us we ought to make our wills. If I die before you, I would like everything to go to you, but if you die before me, I should like it to go to my brother and his boy’. She might reply: ‘Yes, but what if we both die together. After all, one of those little ships might run on the rocks or something and we might both be drowned; or we might both be killed in an aeroplane crash’. To meet that,’ he would say, ‘I will put in that if your death coincides with mine, it is to go to my brother and his boy just the same’. He would use the words ‘coinciding with’, not in the narrow meaning of ‘simultaneous’, but in the wider meaning of which they are equally capable, especially in this context, as denoting death on the same occasion by the same cause. It would not cross Dr Rowland’s mind that anyone would think of such niceties as counsel for the first defendant has presented to us. Russell LJ:… If the evidence was that the testator and his wife were below decks in their cabin and the vessel plunged abruptly to the bottom of the sea, the view might be taken that their deaths were, metaphysics apart, coincident in point of time. But we simply do not know what happened to them. Counsel for the appellants could not suggest, in the case of either spouse, whether the correct inference was death by drowning, trapped in the ship, or death by drowning, sucked down by the sinking ship after going overboard, or death by shark or similar fish, or by thirst, or by drowning after swimming about or floating for a greater or less period with or without a lifebelt. This makes it plain that there is no evidence at all that the deaths were coincident in point of time (in the natural sense of simultaneous) in the mind of the ordinary man.
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Is Bingham LJ adopting a similar reasoning approach to that adopted by Lord Denning in Re Rowland? What justifies Bingham LJ’s move from ‘expectation’ to ‘right’? What facilitates the move? Is Re Rowland about the interpretation of a text (the will) or the interpretation of an event (the loss of the ship and the deaths)? Can events be ‘interpreted’ or can they only be ‘reconstructed’? What was the cause of the testator’s death according to (a) Lord Denning; and (b) Russell LJ? Why, exactly, did Lord Denning arrive at a different result from Russell LJ? Is the difference to be found in the distinction between a nominalist (individualistic) and a universalist (holistic) scheme of intelligibility? Or, put another way, could the approach of Russell LJ be described as methodological individualism—that is to say that, in a collection of events, each event is an event in itself? Did the judges invent their own facts? What role did the facts play in the interpretation of the will?
8 LEGAL REASONING (a) Introductory note One of the purposes of the foundational subjects is to develop ‘the intellectual and practical skills needed to research the law on specific matters and to analyse both statute and case law, to apply it to the solution of legal problems and to communicate…the results of such work’ (joint announcement issued by Law Society and Council of Legal Education on Full Time Qualifying Law Degrees, January 1995). This raises the question of how law is applied to facts. The materials studied so far ought to indicate that the link between ‘facts’ and ‘law’ is by no means simple. However, one link is the reasoning process of lawyers in as much as opinions and judgments act as the manifestation of the application process. Cases without reasoned judgments are unthinkable in the Western tradition of law. Yet what exactly is legal reasoning? This question goes to the heart of law as a discipline since only certain reasons and methods are acceptable to courts. Thus, as Professor Bergel has observed, legal reasoning is ‘a discursive exercise which is to be distinguished from intuition, that is from the immediate and total grasping of an object of thought’. Such reasoning has as its aim to exclude ‘purely individual and subjective attitudes…such as those which became famous from the ‘good judge’ Magnaud who, at the end of the 19th century, 167
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was claiming to justify “the application of the law by human and social considerations, outside of any professional approach”’ (Théorie générate du droit, 3rd edn, 1999, Dalloz, para 246). The ‘professional approach’ is, however, a focal point both for an historical and for a jurisprudential investigation. From the historical viewpoint, legal reasoning cannot be reduced to a single and coherent method; it is more a matter of differing methods associated with different traditions and different schools of jurists. The Roman methods (in causa ius esse position) (see p 389) can thus be contrasted with the methods of 19th century French lawyers (la méthode exégétique), just as the techniques of the humanists (mos Gallicus) can be contrasted with those of the medieval civilians (mos Italicus). The reasoning of common lawyers can equally be contrasted with the German-inspired mos geometricus. If one had to draw out of the history of legal methods one fundamental theme, it might be the tension between inferential reasoning on the one hand and argumentation on the other. That is to say the idea of the ‘juge automate’ functioning within a closed logical system as against the notion of the judge as creative craftsman mediating between ambiguities arising out of an open-ended intellectual system. Both these positions make an assumption about the nature of law and thus the jurisprudential viewpoint also reflects this tension between reasoning and argumentation. However, the tension is less easy to perceive in AngloAmerican legal theory because common lawyers have never really subscribed to the idea that law can be reduced to the kind of mathematical logic that implies ‘not only an axiomatic approach and a deductive presentation, but also the symbolisation substituting calculus based on signs for reasoning based on ideas’ (Bergel, Theorie generate du droit, 3rd edn, 1999, Dalloz, para 252). Law has, to the common lawyer, always been a matter of ordinary, as opposed to mathematical, language. Moreover, the historical emphasis on remedies together with the lack of a faculty-led scientia iuris based on Roman structures has given rise to a system where legal method is a matter of debate. The object is ‘to exclude certain arguments in showing that they were not relevant, then in the elimination of certain solutions because of unreasonableness, without necessarily imposing one type of argument and a single constrained solution’ (Bergel, Théorie generate du droit, 3rd edn, 1999, Dalloz, para 253). Jurisprudential theory has, accordingly, been concerned more with the tension between absolute judicial discretion in the face of uncertainty, on the one hand, and relative or indeed constrained judicial freedom on the other. The common lawyer, in other words, has preferred theories of argumentation to theories of inference. This emphasis on judicial discretion has equally taken theories of legal reasoning into areas well beyond positive legal structures. The relationship between law and politics, law and economics, law and literature and so on have been important contextual frameworks for understanding legal reasoning. 168
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The disadvantage of this otherwise rich Anglo-American tradition is that the actual (as opposed to the ideal) techniques employed in legal reasoning both today and yesterday have not, perhaps, been investigated in the depth they deserve. Or, put another way, techniques such as induction, deduction, syllogistic logic and analogy have perhaps been accepted at face value without proper investigation by the lawyers into the viability of transferring these scientific methods into law. There are, let it be said at once, honourable exceptions to this lack of literature. Yet often these exceptions have not been able to be incorporated directly into a foundational or other positive law subject. This is a serious omission, because the reasoning techniques employed by judges are as much a part of the ultimate solution as any legal precedent or statutory text. It has already been seen how judges can use quasinormative concepts such as ‘interest’ or ‘expectation’ to move from a seemingly objective description of facts to a normative dimension that will ultimately allow the judge to arrive at the solution which he or she thinks correct. Is this the application of scientific methods or is it ideology masquerading as science? The materials that follow will try to open up this question, but this will not be the main focal point. The main point of emphasis will be the tension between reasoning (an inferential approach based on induction, deduction and logic) and argumentation (analogy, metaphor, imagery as well as the standard reasoning techniques). In addition, all these materials—indeed the materials in the whole of this sourcebook—need to be understood in the more general context of reasoning in the social sciences. For, as Donald Kelley observes, law is one of the oldest social sciences (The Human Measure, 1990, Harvard UP).
(b) Reasoning in the social sciences Samuel, G, Schemes of Intelligibility (Seminar Paper, Research Methods in Law, December 1998) The location of a viewpoint inside or outside of law, and its precise positioning within either domain, are by no means the only questions that need to be considered with regard to the theoretical perspective to be brought to bear by the intellectus on the res. The manner in which the interrogation of the phenomena to be studied is to be conducted constitutes ‘a linchpin of the research’ (Quivy and Van Campenhoudt, Manuel de recherche en sciences sociales, 2nd edn, 1995, p 85). Perhaps a change of metaphor is in order since the term ‘theoretical perspective’ is too general. In addition to locating a viewpoint, the researcher must be aware of the various ways in which one can think about, and study, social reality… § 1 Introduction: natural sciences and human sciences The problem of the various schemes of thought that might be utilised in social science research can be viewed in the context of a larger debate between natural and social science. Is it possible to apply the label of ‘science’ when it 169
Sourcebook on Obligations and Remedies comes to knowledge of human facts? The problem is a complex one but essentially has its foundation in the difference between objects in the sense of empirical phenomena independent of humans and humans in the sense of objects of research. Clearly, when humans are the objects of their own study the relationship between intellectus and res becomes much more problematical. Not only is the behaviour of humans itself complex and cultural contexts so diverse, but the researchers themselves could be said to be actively influencing the behaviour and predictability of their object of research in as much as their own scientific investigation is part of the behaviour being investigated. This merging of the intellectus and the res can deprive social ‘science’ of its criteria of validity since it can easily become impossible to falsify a ‘scientific’ hypothesis (cf Karl Popper). In contrast a theory explaining the orbit of a comet and predicting its return to the vicinity of the Earth can be, at least in part, validated by observation. § 2 Natural science and facts Science aims to describe, to explain and to predict the behaviour of objects and it does this through the construction of abstract schemes or models which themselves provide the knowledge. The objects of the empirical sciences are not, then, reality itself; they are the schemes and models and the effectiveness of the model to explain and to predict become in themselves criteria of validity (Granger, La science et les sciences, 1995, pp 70, 78–84). The trajectory of the orbiting comet is not therefore explained in concepts that directly describe the astrophysical reality. The reality is reduced to a model consisting of concepts, relations and/or symbols—for example, a mathematical model— and it is the manipulation of this model that provides the information about the comet’s reappearance. If the model fails to predict correctly, then this will make it suspect. Yet if it does predict correctly, it does not follow that the model is correctly describing the actual facts down to the last detail. As Granger explains, it is a matter of virtual facts; that is to say, facts schematically created within a scheme of intelligence. Objects of differing weight are said to fall at the same speed. But these objects are virtual facts in as much as one is talking of ideal conditions which do not take account of cross-winds or whatever that might actually result in one object hitting the ground before the other (Granger, p 49). § 3 Human sciences The problem facing the social or human scientist is that when they try to construct models of social facts a central aspect of these sciences is human behaviour. This is incapable of being translated into objects (res) which can form part of an abstract model capable logically and mathematically of being manipulated (Granger, p 85). Human behaviour cannot be reduced to such models because it is too complex and unforeseeable; it lacks regularity in the sense of being predictable at the level of the individual. It cannot be mathematically predicted if or if not Dr X will assault a patient or if Mr Y will fail to stop at a road junction. Certainly the number of assaults committed by doctors on patients and the number of road accidents per year can be reduced to statistics and these statistics in turn may well reveal certain regularities allowing prediction. What is the risk of a patient being assaulted or a road user being injured? But the moment one moves to the
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Legal Method and the Common Law holistic level other problems emerge. Why do a certain number of doctors assault their patients every year and why are there x number of car accidents every year? Certainly, explanatory theories can be formulated. But these explanations are always contestable because, for example, they are not easily falsified and because they are founded upon premises which are themselves ambiguous. Do doctors assault patients because they belong to the class of doctors, or to the class of professionals, or because they are human beings and a certain number of human beings assault other human beings every year? Do car accidents happen because all humans make mistakes or because there is something about the activity of car driving? The individual and the holistic analysis may well present quite different explanations each of which seems, in its own way, rationally plausible. A further problem, of course, is that such theories are often based on virtual rather than actual facts. They are facts conceptualised not in terms of each actual and individual human being, but in terms of ‘car driver’—or class of ‘car drivers’—and objects simply labelled as ‘cars’. One is moving from ontology (what exists) to epistemology (theory of knowledge) through models which are ideological in the wide sense of the term. Does the world consist of billions of individual humans or millions of groups of humans? If one replies by saying groups of humans, is one moving from ontology (individual persons that can be touched) to epistemology (a theory of social relations)? And to what extent is epistemology motivated by ideology (an idealised, holistic view of humans)? § 4 Causation In both the natural and the human sciences a range of theories that explain are based on ideas of causation. What causes comets to circle the sun in a regular pattern? What causes doctors to assault patients and car drivers to have accidents? With respect to the natural sciences two interrelated points need to be made. First, causation is, for an empiricist, a question of belief rather than fact since cause and effect cannot be directly observed (Hume). It is a belief based on past observation, on induction and on faith that the future will repeat the past. This faith may be very rationally based (induction), but it cannot actually be proved that, say, cancer cluster spots outside leaking nuclear power stations are caused by the effects of nuclear power. What statistical models show is a probability and this probability factor might be increased by medical research models. Indeed it might well be argued that the probability is so regular—particularly when supported by the (seemingly) causal effects of radiation on human cells—that it transcends belief to become a ‘law’. Yet it is still only a hypothesis; it can be falsified. The second point to be made, therefore, is that a causal theory in science is open—and according to Popper must be open—to falsification. When one turns to the human sciences, because of the complexities of behaviour and social interaction, causation is much more problematic. A range of causal theories can be advanced in respect, say, of the causes of crime. But these theories, and indeed the notion of crime and criminals, are themselves open to doubt, if only because many cannot in the scientific sense be falsified. Historical theories face the same problems. A thesis that the First World War was prolonged because the soldiers enjoyed the experience cannot really be proved or disproved; it is a matter of interpretation and argumentation. Other equally convincing models can be constructed, each representing a ‘singular reality’
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Sourcebook on Obligations and Remedies (Granger, pp 86–87). In economics the difficulty has been analysed as being one of the capacity of a social science to constitute theories based on facts since there are problems both with the object and with the method. ‘Where the experimental sciences can develop laws from repeated observation’, write two economic theorists, ‘the economy (social sciences in general) come up against the difficulty of separating fictional causes from real causes’ (Leroux and Marciano, La philosophic économique, 1998, p 95). § 5 falsification, coherence and interpretation Models, even scientific models, are not always dependent upon empirical verification. Some systems, such as mathematics, are validated by the internal coherence of the system itself. The point is summed up by Bunge: ‘If a mathematician postulates the existence of a new conceptual object and does it without falling into contradiction, nobody will be able to refute it, even if his postulate ends up being ignored or considered wanting in interest. In contrast, if a physicist, a biologist or an historian postulates the existence of a concrete object which has not yet been discovered, they are thus acting in the hope of its discovery’ (Épistémologie, 1983, p 60). When this dichotomy is transferred into the social sciences, the problem of the object becomes evident. Is the model one that can be falsified by external reality? If not, then the object’s existence is probably one constructed by the theory itself and this forces one back to the ‘coherence’ of the model or theory and to the plausibility of its explanatory power. What is the internal structure of the model or theory? Is it a model claiming to be based on facts, on abstract concepts or on texts? If it is constructed out of facts, are these virtual or concrete facts? In short, how can the model and its assertions be validated? Can economists predict with accuracy or are their virtual facts models simply inadequate? Can historians predict or are their factual models too singular? Granger makes two important points. First, ‘a theory dealing with human facts is constantly menaced, if one is not careful, with becoming an ideology, substituting myths for concepts and prescriptions for descriptions’ (p 99). Secondly, it may be that social facts, like the weather, are too complex. This difficulty may be overcome with simulation and the development of ever more powerful computers (p 101). § 6 Schemes of intelligibility The complexity of human facts and the impossibility of subjecting these facts to laboratory experimentation have resulted in recourse to a range of other methods of analysis and schemes of intelligibility. These methods and schemes, by no means easy to isolate and enumerate, reflect in turn theoretical (epistemological) perspectives and thus need to be appreciated by anyone researching into the human and social sciences. Law might appear different in as much as it is tempting to believe that it has fashioned its own methodology. However legal technique and method are not in themselves unproblematic (as will be seen in a future seminar); such methods as commonly set out in the textbooks are possibly of limited epistemological value to the serious researcher (save perhaps as objects of research in themselves). Whatever the position, different social science schemes of intelligibility are, perhaps on occasions unconsciously, brought to bear both from within legal technique itself (statutory interpretation as compared to
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Legal Method and the Common Law case law analysis) and from an external standpoint (syllogistic method as compared to hermeneutics). Decoding and enumerating these different schemes of conceptualisation and observation presents serious problems given the diversity and unsystematised (in comparison with those used in the natural sciences) nature of concepts employed (Granger, pp 87–89). However a major contribution to the typology of such schemes of intelligibility in the social science has been made by J-M Berthelot in L’intelligence du social, 1990, Chapter II (see also Granger, pp 90–92). § 7 The causal scheme Bethelot identifies six basic types of scheme of intelligence. The first scheme identified is the causal scheme whereby one phenomenon (B) is seen as depending on another phenomenon (A) according to a relation in which it is impossible to have B without A and that in any variation of A there corresponds a variation in B (reciprocal implication). It follows’, says Bethelot, ‘that A and B are distinct either in reality (different objects or realities) or analytically (different levels of a global reality) and that the element A is conceived as being necessarily prior, chronologically or logically, to the element B’ (pp 62–63). One example that might be given of this scheme is Durkheim’s study of suicide: the number of suicides is seen as being caused by another phenomenon, social cohesion, which is logically prior to the suicides (Quivy and Van Campenhoudt, Manuel de recherche en sciences societies, 2nd edn, 1995, p 94). In the medical sciences the scheme is of importance in diagnosing and treating specific illness and it is of course relevant to the interpretation of statistical data. The phenomena in play (A and B) are not necessarily individualised objects, for the scheme can be applied, as Berthelot observes, to structural systems. Thus, the Marxist thesis concerning the relationship between economic infrastructure (A) and social superstructure (B) is one of causality and dependence (pp 64–65). In legal reasoning the causal scheme is particularly prevalent: a victim of harm (A) must prove that the harm was caused by the act or activity of the defendant (B) before the defendant will be liable for the harm (see, for example, Dig 9.2.52.2; CC, Art 1382; Jolley v Sutton LBC [1998] 1 WLR 1546). § 8 The functional scheme The second scheme is based on the idea that organisms, and indeed machines, are to be understood in terms of their practical functions (rather than say their individual parts). This scheme is better known today under the label of systems analysis whereby organisms are seen as being made up of circular relations. The logical form symbolised by the circular relation (S?B?S) is that of the reciprocal action’; and ‘the functional requirements of S require that B fulfils a function useful to S’ (Berthelot, p 65). A carburettor in a car engine is thus to be understood not by a researcher dismantling it into its component parts, but by viewing its function within the car engine itself seen as a functioning system. In sociology this scheme has quite old roots in as much as it underpins holistic theories of society; in particular those now much criticised theories which envisaged society as being analogous to biological organisms. However it has reappeared in a much more sophisticated version under the label ‘systems theory’. This theory, drawing its inspiration from contemporary scientific thinking, envisages as the object of knowledge not
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Sourcebook on Obligations and Remedies society itself, but an abstracted model of society viewed as a functioning system. The epistemological strength of this scheme is to be found in its ability ‘to go beyond the purely empirical that is to say the study of singular events’, and thus to escape the traditional dichotomy between the whole and its parts (Lucan, La systèmique sociale, 1993, pp 11, 37). When applied to law, systems theory and the functional approach can provide important insights into codification, legal classification and indeed the role of law in society (Samuel (1997) 17 LS 448). § 9 The structural scheme The main characteristic’ of the structural scheme ‘is that [the elements] are inserted into a system of oppositions where…objects, properties, relations… become signs, elements of a system operating as a code’ (Berthelot, p 70). This scheme was introduced into social science through linguistics (in particular the work of Lèvi-Strauss) since language is perhaps the paradigm example of a closed structure of arbitrary and solid signs, oppositions and correlations. In such a code a term A takes its signification in comparison with terms B, C, D, etc, which are in opposition to it; thus the ‘most simple code is one which has only two signs: ‘red light’…‘green light’…’. When applied to social science the structural scheme is used to analyse social behaviour in terms of a code. ‘Affection, tenderness, reserve, respect, coldness,’ writes Berthelot, ‘are attitudes that the kinship system selects (amongst others) in order to signify its component relations through the interplay of their association and their opposition’. However the significance of the structural scheme goes beyond that of a formal code to embrace the symmetry and pattern of the structure itself, its isomorphic qualities (pp 71–72). Thus at its most concrete level analogy and metaphor would be examples of the use of isomorphic structures as a scheme of reasoning. At more abstract levels the use of structural patterns is fundamental to the understanding and applicability of theoretical structures. Thus, Weber’s thesis of the relationship between the Protestant ethic and the Spirit of Capitalism can be seen as an example of the use of an isomorphic model (Berthelot, p 72). Another, more general, example is the use of hierarchical structures in social and scientific theory. As an historian has observed: The argument from animal hierarchies to human hierarchies may be mere nonsense; probably it is nonsense; but it is not just medieval nonsense. The human mind has never ceased to be fascinated by natural hierarchy; and the point that hierarchical ordering is a near-universal manifestation among human cultures seems self-evident’ (Tierney, Religion, Law and the Growth of Constitutional Thought 1150–1650, 1982, p 44). § 10 The hermeneutical scheme The hermeneutical scheme has its immediate intellectual foundation in the theological interpretation of old written texts. But it is ‘a very ancient scheme of intelligibility, probably one of the first developed by humanity in its attempt to explain reality’. And it ‘consists of developing systematically a vertical logic of the beyond of appearance or surface of things: B is not only B, for example a tree a little odd in the way it twists its branches into an isolated entanglement’. Thus ‘B is simultaneously something else, a force, a spirit, a power which is recognisable by this form’. B and A (this below the surface
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Legal Method and the Common Law spirit) become one in that ‘B and A combine in an animistic ontology where B is both A and B’. However today the hermeneutical scheme has transcended such pre-scientific thinking: it ‘involves B being seen only as a sign, and thus divided into a signifier (what it is) and a signified (what it expresses)’ (Berthelot, p 73). In the social sciences it is the human facts which act as the signifier and it is for the particular science to explain these significations (Dilthey). The idea of interpreting facts is also of relevance to law in that the role of the judge has been said to be ‘a hermeneutical process aiming to discover unknown facts from the known facts of every cause’ (Ivainer, L’interpretation des faits en droit, 1988, p 22). However the hermeneutical scheme is particularly relevant to those human sciences involving the interpretation of texts. It is thus a scheme that especially characterises the work of the medieval Roman lawyers—whose object of study (sign) was the Corpus Iuris— and the exegetical school of French lawyers whose object of study and interpretation was uniquely the Code civil (Van Caenegem, Judges, Legislators and Professors, 1987, pp 124–26). More generally the interpretation of statutes and reported cases might equally be labelled ars hermeneutica. However hermeneutics also characterises the contemporary school of legal philosophy represented by jurists such as Dworkin and Habermas. Law, for Dworkin, is interpretation. § 11 The actional scheme The emphasis of the actional scheme (le schème actanciel) is on the actor. The phenomenon B that one wants to study is thought of as the result of the behaviour of the implicated actors’ and thus it ‘involves the actual recognition of the intentionality of the action, its irreducibility into a causal determination: the strategic concepts in politics, and rational calculation in economics, imply a submission of the action to particular desired ends’ (Berthelot, p 76). Economists for example build up a specific picture of the actor as homo rationalis and lawyers, of course, have developed a range of actors. The ‘bon père de famille’, the ‘reasonable man’, the ‘contracting party’ and so on are some of the more well-known examples. Indeed, the whole of Western criminal law could be said to be premised on this scheme. Thus, one is criminally liable only for one’s own act (see, for example, French Code pénal, Art 121–1) and this act must be founded upon an intention to commit the criminal act (Art 121–3). The action as linked to intention is not, however, confined to the individual; it can, as Berthelot points out, be applied to collective entities and to organisations. In sociology the scheme appears under the epistemological label of ‘methodological individualism’ which in turn is associated with Max Weber (although its epistemological roots are much older). As far as Weber was concerned, ‘the foundational sociological unit could consist in first analysis only in “single persons”, “particular individuals” and even “isolated” or “separated” persons—consequently postulated as social science “atoms’” (Laurent, L’individualisme méthodologique, 1994, p 64). This individualist methodology is a theoretical perspective of such importance in both the human and by analogy the natural sciences that it transcends the actional scheme to warrant its own analysis as an epistemological paradigm (see § 14).
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Sourcebook on Obligations and Remedies § 12 The dialectical scheme The dialectical scheme in many ways stands in opposition to methodological individualism in that it is essentially holistic in its structural form. It is ‘a system basically defined by the existence of two terms at one and the same time indissociable and opposed constituting what can be called a contradiction’ (Berthelot, p 82). It can be expressed in the formula A & non A?B. This methodology is associated with the philosopher Hegel (died 1831) who developed a whole thesis of history based on the idea of a process of internal contradiction. But as a method dialectica was a hermeneutical device used by the medieval scholastic philosophers and lawyers for ironing out apparent contradictions in texts. The view in the late Middle Ages was that contradictions were only apparent not real since ‘the unity of the human mind, being a divine creation, could not contradict itself in fundamental matters’ (Ullmann). The way to solve these contradictions was through the operation of a distinctio which itself could be tested through argumentation (disputatio). The results of this scholastic methodology must never be underestimated as the great work of the canon lawyer Gratian, finished in 1140, bears witness. Entitled Concordia discordantium canonum, it harmonised a huge mass of discordant and contradictory texts to become the most influential textbook on canon law during the whole of the early modern period. The dialectical methodology thus became associated with legal studies and with philosophy in general and this was the intellectual foundation for the modern idea that reality is riddled with contradictions which must be transcended. The method still finds important expression in Western legal systems in the maxim audi alterant partem which translates into the procedural principle of contradiction (see NCPC, Art 16). However as a scheme of intelligibility ‘the difficulty consists in actually grasping the internal process at work’. For the ‘risk is always to project onto it something which is only an external form: the formula aÚnot aÚnot not a often illustrated by biological phenomena (caterpillarÚ chrysalisÚ butterfly, budÚ flowerÚ fruit) is explicative only if it leads to an effective account of the passage from one state to the other’. And, if not, ‘it is only descriptive’ (Berthelot, p 82). Nevertheless, the importance of the dialectical scheme in the structuring and presentation of a thesis (the two part French plan for example) remains of fundamental importance. § 13 Interrelationship of schemes The isolation of these schemes of intelligibility implies neither that the typology is exhaustive nor that the various schemes are mutually exclusive. The causal and the actional scheme for example might be said to typify much of substantive Western criminal and private law. At the level of procedure the dialectical scheme is of particular relevance and codification certainly lends itself to a structural analysis and possibly a functional analysis as well. The hermeneutical scheme, while primarily associated, historically, with theological texts, deserves a special place in the history of legal theory (see, for example, Goodrich, Languages of Law, 1990, pp 66–71, 108–110). It was one of the central schemes of intelligibility used by academic lawyers working in the medieval and modern universities. Nevertheless it has never been a unique scheme. The use of analogy for example has an equally respectable pedigree in legal reasoning and this is a form of analysis that is based on the isomorphic qualities to be found in factual situations. Analogy might well then be seen 176
Legal Method and the Common Law as an aspect of structuralism. The American Realists, while not systems theorists, nevertheless put the emphasis only on the functional role of legal concepts and this functional approach is, so some comparative lawyers have argued, the only methodology that is possible in comparative law (Zweigert and Kötz, An Introduction to Comparative Law, 3rd edn, 1998, pp 34ff). Dialectical methodology would, however, seem to have its relevance for the comparative lawyer as well since “he may be able to fashion a new solution, superior to all others, out of parts of different national solutions’ (Zweigert and Kötz, p 47). Indeed dialectical argument and hermeneutics would appear to be the two main schemes which characterised the scholastic methods of the medieval Romanists. In short, legal method involves a melange of social science schemes of intelligibility. § 14 Holistic and individualistic methodology If one had to abstract from Berthelot’s schemes one fundamental theme or dichotomy it is perhaps that of the opposition between a ‘holistic’ and an ‘atomistic’ analysis of society (Berthelot, pp 152–61). The dichotomy is one of ontology, that is say it is concerned with what exists as a physical reality. Does one view society as a ‘thing’ in itself or does one view society only as a collection of individual people and physical objects? The debate is an old one and indeed is reflected in a number of Roman legal texts (see, for example, Dig 5.1.76; Dig 41.3.30)…
Notes and questions 1
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‘We can find an even more fruitful comparison between literature and law…by constructing an artificial genre of literature that we might call the chain novel. In this enterprise a group of novelists writes a novel seriatim; each novelist in the chain interprets the chapters he has been given in order to write a new chapter, which is then added to what the next novelist receives, and so on. Each has the job of writing his chapter so as to make the novel being constructed the best it can be, and the complexity of this task models the complexity of deciding a hard case under law…’ (Dworkin, Law’s Empire, 1986, Fontana, p 229). What scheme of intelligibility is Dworkin proposing? Is there not an important difference between writing a novel and writing a judgment? Is Berthelot/s scheme exhaustive?
(c) Induction and deduction Home Office v Dorset Yacht Co Ltd [1970] AC 1004 House of Lords (See also p 645.) Lord Diplock:… The method adopted at this stage of the process is analytical and inductive. It starts with an analysis of the characteristics of the conduct and relationship involved in each of the decided cases. But the analyst must know what he is looking for; and this involves his approaching his analysis 177
Sourcebook on Obligations and Remedies with some general conception of conduct and relationships which ought to give rise to a duty of care. This analysis leads to a proposition which can be stated in the form: In all the decisions that have been analysed a duty of care has been held to exist wherever the conduct and the relationship possessed each of the characteristics A, B, C, D, etc, and has not so far been found to exist when any of these characteristics were absent.’ For the second stage, which is deductive and analytical, that proposition is converted to: In all cases where the conduct and relationship possess each of the characteristics A, B, C, D, etc, a duty of care arises.’ The conduct and relationship involved in the case for decision is then analysed to ascertain whether they possess each of these characteristics. If they do the conclusion follows that a duty of care does arise in the case for decision. But since ex hypoihesi the kind of case which we are now considering offers a choice whether or not to extend the kinds of conduct or relationships which give rise to a duty of care, the conduct or relationship which is involved in it will lack at least one of the characteristics A, B, C or D, etc. And the choice is exercised by making a policy decision…which…will be influenced by the same general conception of what ought to give rise to a duty of care as was used in approaching the analysis. The choice to extend is given effect to by redefining the characteristics in more general terms so as to exclude the necessity to conform to limitations imposed by the former definition which are considered to be inessential… Inherent in this methodology, however, is a practical limitation which is imposed by the sheer volume of reported cases. The initial selection of previous cases to be analysed will itself eliminate from the analysis those in which the conduct or relationship involved possessed characteristics which are obviously absent in the case for decision. The proposition used in the deductive stage is not a true universal. It needs to be qualified so as to read: In all cases where the conduct and relationship possess each of the characteristics A, B, C and D, etc, but do not possess any of the characteristics Z, Y or X, etc, which were present in the cases eliminated from the analysis, a duty of care arises.’ But this qualification, being irrelevant to the decision of the particular case, is generally left unexpressed… From the previous decisions of the English courts…it is possible to arrive by induction at an established proposition of law as respects one of those special relations: viz, A is responsible for damage caused to the person or property of B by the tortious act of C (a person responsible in law for his own acts) where the relationship between A and C has the characteristics: (1) that A has the legal right to detain C in pénal custody and to control his acts while in custody; (2) that A is actually exercising his legal right of custody of C at the time of C’s tortious act; and (3) that A if he had taken reasonable care in the exercise of his right of custody could have prevented C from doing the tortious act which caused damage to the person or property of B; and where also the relationship between A and B has the characteristics; (4) that at the time of C’s tortious act A has the legal right to control the situation of B or his property as respects physical proximity to C; and (5) that A can reasonably foresee that B is likely to sustain damage to his person or property if A does not take reasonable care to prevent C from doing tortious acts of the kind which he did…
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Questions 1
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Lord Diplock suggests that, in form, legal method is a matter of induction and deduction, but that in substance, there is much room for choice. Is this space for choice something inherent in induction and deduction itself, or is it something special to legal reasoning? Does Sherlock Holmes reason by induction or deduction? If choice is to be determined by the making of a policy decision, does this in effect mean that all legal reasoning is, in the final analysis, a matter of policy? What do you think is meant by policy in this context?
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There is no science without method and, so it may be argued, there is no reliable method without science. Science and methodology are locked in a close embrace. Now, with respect to scientific research, method is usually presented via models which constitute at one and the same time both the particular science and its method. One can discover reliable new knowledge only by conforming to set procedures and these procedures relate in turn to a model which itself forms part of a scientific theory. Two stages are normally envisaged: induction and verification. That is to say, since Galileo, the scientist proposes a hypothesis and then subjects it to experimental proof (Bunge, Épistémologie, 1983, Maloine, p 31). If the hypothesis is confirmed, one can move towards a third stage: the hypothesis is translated into a scientific law and finally to an axiom from which one can then deduce knowledge. Induction, verification and deduction are, then, the methods commonly associated with all aspects of science (of course the position is, in truth, much more complex than this). However, when one talks about methodology in the context of legal research, can it be reduced to induction, verification and deduction? Is there a single scientific method applicable to all sciences, including the social sciences? In a very general sense, induction is a word which gives expression to all reasoning which generalises. Aristotle defined it in his Topics as the passage from the particular to the general. However, induction is not a reliable form of reasoning in that general principles, laws or theories induced by observation of facts might ultimately prove to be mistaken. Indeed, in the area of politics it can be dangerous (for example, it can lead to discrimination on the basis of inaccurate inductions). With regard to law, induction as a methodological tool has a long history stretching back to Roman law. For example, the movement from a law of contracts to a law of contract could be seen in terms of induction; ‘agreement’, originally recognised as a common denominator (Dig 2.14.1.3), became the ‘law’ underpinning the general theory of contract (CC, Art 1101). The original 179
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edition of Goff and Jones, Law of Restitution, 1966, Sweet & Maxwell, can be seen as a good example of induction as a research tool. The authors argued for a reinterpretation of a diverse range of common law and equity cases in terms of the unjust enrichment principle; in other words, this principle could be induced out of the English cases so as to act as a law capable of explaining and predicting. Deduction is often seen as the reverse of induction: that is to say, it is a reasoning process by which one goes from the general to the particular. More precisely, deduction can be described as saying that certain pieces of knowledge being considered as acquired, other knowledge can be inferred as a consequence. Thus if A=B and B=C, then it can be deduced that A=C What is so valuable about deduction as a knowledge technique is that information can be acquired without recourse to empirical investigation, experience or any other exterior source (Oléron, Le raisonnement, 4th edn, 1995, PUF, pp 73–74). Thus, someone who lives far away from the UK and knows that cotton requires hot and dry conditions to grow can deduce whether or not cotton grows naturally in the UK. All that is needed is information on UK weather conditions. In law, the deductive method finds expression through the use of the syllogism (see below, p 183). Grant v Australian Knitting Mills Ltd [1936] AC 85 Privy Council This was a successful action for damages, against a manufacturer of underpants, for injury caused to a purchaser by a pair of underpants which had not been properly decontaminated of chemicals before leaving the factory. Lord Wright:… But when the position of the manufacturers is considered different questions arise: there is no privity of contract between the appellant and the manufacturers: between them the liability if any, must be in tort, and the gist of the cause of action is negligence. The facts set out in the foregoing show, in their Lordships’ judgment, negligence in manufacture… The appellant is not required to lay his finger on the exact person in all the chain who was responsible, or to specify what he did wrong. Negligence is found as a matter of inference from the existence of the defects taken in connection with all the known circumstances: even if the manufacturers could by apt evidence have rebutted that inference they have not done so… It is clear that [Donoghue v Stevenson] treats negligence, where there is a duty to take care, as a specific tort in itself, and not simply as an element in some more complex relationship or in some specialised breach of duty, and still less as having any dependence on contract. All that is necessary as a step to establish the tort of actionable negligence is to define the precise relationship from which the duty to take care is to be deduced. It is however, essential in English law that the duty should be established: the mere fact that a man is injured by another’s act gives in itself no cause of action: if the act is deliberate, the party injured will have no claim in law even though the injury is intentional, so long as the other party is merely exercising a legal right: if the act involves lack of due care, again no case of actionable negligence will arise 180
Legal Method and the Common Law unless the duty to be careful exists. In Donoghue’s case the duty was deduced simply from the facts relied on—namely, that the injured party was one of a class for whose use, in the contemplation and intention of the makers, the article was issued to the world, and the article was used by that party in the state in which it was prepared and issued without it being changed in any way and without there being any warning of, or means of detecting, the hidden danger: there was, it is true, no personal intercourse between the maker and the user; but though the duty is personal, because it is inter partes, it needs no interchange of words, spoken or written, or signs of offer or assent; it is thus different in character from any contractual relationship; no question of consideration between the parties is relevant: for these reasons the use of the word ‘privity’ in this connection is apt to mislead, because of the suggestion of some overt relationship like that in contract, and the word ‘proximity’ is open to the same objection… The principle of Donoghue’s case can only be applied where the defect is hidden and unknown to the consumer, otherwise the directness of cause and effect is absent: the man who consumes or uses a thing which he knows to be noxious cannot complain in respect of whatever mischief follows, because it follows from his own conscious volition in choosing to incur the risk or certainty of mischance. If the foregoing are the essential features of Donoghue’s case they are also to be found, in their Lordships’ judgment, in the present case. The presence of the deleterious chemical in the pants, due to negligence in manufacture, was a hidden and latent defect, just as much as were the remains of the snail in the opaque bottle: it could not be detected by any examination that could reasonably be made. Nothing happened between the making of the garments and their being worn to change their condition. The garments were made by the manufacturers for the purpose of being worn exactly as they were worn in fact by the appellant: it was not contemplated that they should be first washed. It is immaterial that the appellant has a claim in contract against the retailers, because that it a quite independent cause of action, based on different considerations, even though the damage may be the same. Equally irrelevant is any question of liability between the retailers and the manufacturers on the contract of sale between them. The tort liability is independent of any question of contract. It was argued, but not perhaps very strongly, that Donoghue’s case was a case of food or drink to be consumed internally, whereas the pants here were to be worn externally. No distinction, however, can be logically drawn for this purpose between a noxious thing taken internally and a noxious thing applied externally: the garments were made to be worn next to the skin: indeed Lord Atkin specifically puts as examples of what is covered by the principle he is enunciating things operating externally, such as ‘an ointment, a soap, a cleaning fluid or cleaning powder’… The decision in Donoghue’s case did not depend on the bottle being stoppered and sealed: the essential point in this regard was that the article should reach the consumer or user subject to the same defect as it had when it left the manufacturer. That this was true of the garment is in their Lordships’ opinion beyond question. At most, there might in other cases be a greater difficulty of proof of the fact…
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Notes and questions 1
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Why can no logical distinction be drawn between a bottle of ginger beer and a pair of underpants? Is a pair of underpants subject to the Food Safety Act 1990? Was the plaintiff injured by (a) a dangerous pair of underpants; or (b) by a dangerous product; or (c) by a careless act of the defendant? Do ‘products’ exist, or are they an invention of the legal mind? What reasoning method was employed in this case: a method similar to that outlined by Lord Diplock in Dorset Yacht (above) or a method that one might describe as reasoning by analogy? What is the difference between induction, deduction and analogy? Did Grant in any way alter the material facts of Donoghue? The term “clear case” refers to a situation of isomorphy in which the applicability of a legal rule or a set of legal rules to certain facts is clear and unproblematic… In these cases of isomorphy, where the facts of the case clearly fit into the operative facts of the legal rule, which attaches a legal consequence to those facts, judicial action can be accounted for by pointing to the fact that a rule is being almost unreflectively applied…’ (Bengoetxea, The Legal Reasoning of the European Court of Justice, 1993, OUP, pp 184, 186). Is Grant an easy case? Do rules actually have ‘operative facts’? ‘But problems arise when hard cases have to be decided and those decisions justified. What if no valid norm seems to govern the case? Which norm has to be chosen? What if a norm which tendentially governs the case leads to undesirable consequences? How must a norm be interpreted in order to obtain the best possible result? It is clear that all these questions take us to the domain of axiology, morality, or politics and yet legal justification is not expected to question the very system of law nor the ideology of adjudication embodied therein, that is, the postulate that legal decisions have to be grounded on legally relevant sources, a postulate that embodies the rule of law ideal…’ (Bengoetxea, The Legal Reasoning of the European Court of Justice, 1993, OUP, p 146). How do policy decisions fit into this scheme of easy and hard cases?
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(d) Syllogism FA and AB Ltd v Lupton [1972] AC 634 House of Lords Lord Simon:… A judicial decision will often be reached by a process of reasoning which can be reduced into a sort of complex syllogism, with the major premise consisting of a pre-existing rule of law (either statutory or judge-made) and with the minor premise consisting of the material facts of the case under immediate consideration. The conclusion is the decision of the case, which may or may not establish new law—in the vast majority of cases it will be merely the application of existing law to the facts judicially ascertained. Where the decision does constitute new law, this may or may not be expressly stated as a proposition of law: frequently the new law will appear only from subsequent comparison of, on the one hand, the material facts inherent in the major premise with, on the other, the material facts which constitute the minor premise. As a result of this comparison it will often be apparent that a rule has been extended by an analogy expressed or implied. I take as an example… National Telephone Co v Baker [1893] 2 Ch 186. Major premise: the rule in Rylands v Fletcher (1866) LR 1 Exch 265; (1868) LR 3 HL 330. Minor premise: the defendant brought and stored electricity on his land for his own purpose; it escaped from the land; in so doing it injured the plaintiff’s property. Conclusion: the defendant is liable in damages to the plaintiff (or would have been but for statutory protection). Analysis shows that the conclusion establishes a rule of law, which may be stated as ‘for the purpose of the rule in Rylands v Fletcher electricity is analogous to water’ or ‘electricity is within the rule in Rylands v Fletcher’. That conclusion is now available as the major premise in the next case, in which some substance may be in question which in this context is not perhaps clearly analogous to water but is clearly analogous to electricity. In this way, legal luminaries are constituted which guide the wayfarer across uncharted ways.
Questions 1 Why is electricity analogous to water? 2 Does Lord Simon imply that knowledge of law consists of having knowledge of legal rules? If so, where does policy fit into the system? 3 What is meant by ‘material facts’? What are the material facts of (a) Donoghue v Stevenson (see p 65) and (b) Rylands v Fletcher (see p 660)? Have the material facts of Rylands been altered by the Cambridge Water case (see p 665)? 4 What is the hardest part of Lord Simon’s complex syllogism: the decision that electricity is analogous to water or the decision that the defendant is or is not liable? 5 Is Lord Simon really telling us how law is applied to facts? 6 The syllogism remains…the general support of reasoning but the choice of premises presupposes each time a debate. No premise can be admitted without admitting at the same time the opposite premise, so that no conclusion can be retained without having envisaged the opposite 183
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conclusion and without having operated a choice between two possible conclusions… The influence of dialectics on legal reasoning does not exclude, then, all intervention of formal logic. This implies a certain comprehensiveness to legal reasoning which gives it its specific character …’ (Bergel, Theorie generale du droit, 3rd edn, 1999, Dalloz, p 276). Is the specific character of legal reasoning simply the intermixing of the dialectical scheme of intelligibility with a structural (logical) scheme (cf above, pp 169–77)? Notes 1
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It has long been thought that deduction was reducible to the syllogism. In its classical form (Aristotle, as developed by the medieval philosophers) the typical example is a structure of three parts: (a) all men are mortal; (b) Socrates is a man; (c) therefore, Socrates is mortal. The syllogism is thus composed of three propositions: (a) the major premise; (b) the minor premise; and (c) the conclusion. What makes this seemingly banal example so important is that the structure is entirely abstract and formal. The elements ‘man’, ‘mortal’ and ‘Socrates’ can be replaced by other elements. For example: (a) cotton grows naturally where it is hot and dry; (b) in England it is cold and humid; (c) therefore, cotton does not grow naturally in England. And ‘it is on these formal properties that the conclusive value of the syllogism rests’ (Oléron, Le raisonnement, 4th edn, 1995, PUF, p 75). This technique of moving from a general proposition (law) to a particular proposition (fact) has always appeared particularly valuable to the jurist. Thus: (a) whereas judges are forbidden to make general and regulatory pronouncements on matters which are submitted to them (CC, Art 5); (b) that in assessing damage resulting from a crime the judges referred to a general rule established by them in previous cases; (c) therefore, the text of the code has been infringed (Cass crim 3.11.1955; D 1956.1.557). According to Lord Simon, the syllogism is seen as being at the basis of reasoning in the common law as well. However, as Piaget has expressed it, deduction ‘becomes explicable only at the moment when it takes a constructive form, that is to say when it tends to set up a “structure”…[or] what one can call “models”’ (L’epistemologie génétique, 4th edn, 1988, PUF, p 103). Conclusions are arrived at as a result of transformations at the level of the model. One has need, therefore, of abstract structures for the understanding of cotton and the understanding of weather (see above); without these scientific models the conclusion about whether cotton grows in England would not be possible without empirical investigation. Accordingly, when one looks at the use of deduction in law, it only becomes possible when legal thinking 184
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has reached a certain level of sophistication. A Roman jurist was able to deduce that one does not lose possession of money one has buried in a place now forgotten: for otherwise one would lose possession of slaves when they wandered out of sight (Dig 41.2.44 pr). Such thinking requires a ‘structure’ whereby both slave and money are conceptualised as a res, thus allowing the structure persona-res to be applied to both situations (see Samuel and Rinkes, Law of Obligations and Legal Remedies, 1996, Cavendish Publishing, pp 4–6). The more that one wants to rely upon the deductive method, the more it has to be accompanied by systematisation of law into ever ‘harder’ models (see Wieacker, A History of Private Law in Europe, 1995, OUP (trans Weir), pp 239–56, 341–6). As Pédamon has summarised it: the ‘transposition, in the legal domain, to a mode of reasoning which was essentially deductive, applied in a rigorous manner and independently of all consideration drawn from experience or from social life could be labelled mos geometricus; it had important consequences for legal method’ in that it ‘orientated German legal science towards a kind of “conceptual hardening” (Holleaux) which foreshadowed the work of the Pandectic school and which still characterises today, at least in some respects, the German legal spirit’ (Le droit allemand, 1985, PUF, pp 15–16). The BGB was the final result of this modelisation. Harbour Assurance Co v Kansa General International Insurance Co Ltd [1993] QB 701 Court of Appeal This was a claim for a declaration that an arbitration clause contained in an insurance contract void for illegality was also void. The Court of Appeal held that the arbitration clause was not affected in this case by the illegality of the contract. Hoffmann LJ:… Mr Longmore’s argument is extremely simple. He says that the question raised on the pleadings is whether the retrocession agreement was void ab initio. The arbitration clause formed part of the retrocession agreement. Therefore the issue must involve the validity of the arbitration clause itself. Mr Longmore calls this logic. I call it over-simplification. The flaw in the logic, as it seems to me, lies in the ambiguity of the proposition that the arbitration clause ‘formed part’ of the retrocession agreement. In one sense of course it did. It was clause 12 of a longer document which also dealt with the substantive rights and duties of the parties. But parties can include more than one agreement in a single document. They may say in express words that two separate agreements are intended. Or the question of whether the document amounts to one agreement or two may have to be answered by reference to the kind of provisions it contains… There is no single concept of ‘forming part’ which will provide the answer in every case…
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Notes and questions 1
2
The syllogism is reliable only in certain situations. Because natural language is a system in itself, there are a number of dangers when it is used to give expression to other knowledge systems: (a) a mouse eats cheese; (b) a mouse is a word of one syllable; (c) therefore, words of one syllable eat cheese. In particular, the words employed must keep their same signification in the major and minor premises. If they do not, then the conclusion can be absurd, as the example indicates. Also care must be taken not to confuse genus and species: (a) cats eat meat; (b) cats are animals; (c) therefore, animals eat meat. This conclusion might not be quite as absurd as words eating cheese, but it is equally wrong, in as much as it does not accord with reality. Not all animals eat meat. In addition, there is the problem of the missing premise (tertium non datur): (a) smoking causes lung cancer; (b) Socrates died of lung cancer; (c) therefore, Socrates was a smoker. The missing premise is that lung cancer has other causes as well as smoking. Harbour Assurance shows how the syllogism can prove particularly weak in law in as much as the structure or model is subject to little external restraint and thus proves a ‘movable goal post’. Intellectual systems can, in short, contain uncertainties and ambiguities. Does Harbour Assurance indicate that logic is simply a form of argumentation? Or does it indicate that legal reasoning should never be seen as a matter of logic as such, but a matter of what premise is to be adopted? Whittaker v Campbell [1984] QB 318 Queen’s Bench Division Robert Goff LJ:… We are concerned in the present case with the construction of certain words, viz, ‘without having the consent of the owner’, in their context in a particular sub-section of a criminal statute. However, the concept of consent is relevant in many branches of the law, including not only certain crimes but also the law of contract and the law of property. There is, we believe, danger in assuming that the law adopts a uniform definition of the word ‘consent’ in all its branches…
Questions 1 2 3
If the law adopts a uniform definition of ‘offer’, why should things be different with a word like ‘consent’? (Cf Fisher v Bell, p 24.) Are the categories of crime, contract and property distinct ‘blocks’ of rules? If so, to what extent do rules from different blocks interrelate? ‘It is clear for instance that if a man brings and keeps a wild beast on his land…he may be liable for any damage occurring within or without his premises without proof of negligence. Such an exception will serve to illustrate the proposition that the law of torts has grown up historically in separate compartments and that beasts have travelled in a compartment 186
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4
of their own’ (Lord Simonds, Read v J Lyons and Co [1947] AC 156, p 182). Is liability for a dangerous animal in France based on a general principle? If so, why should this principle not be relevant to English law? ‘[T]he law should if possible be founded on comprehensive principles: compartmentalisation, particularly if producing anomaly, leads to the injustice of different results in fundamentally analogous circumstances’ (Lord Simon, National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675, p 701). Does this statement undermine Hoffmann LJ’s approach? Does it conflict with the view of Lord Simonds in Read v Lyons (above)? Does compartmentalisation always lead to injustice? What determines if something is ‘fundamentally analogous’? Is electricity fundamentally analogous to water? Is a pair of underpants fundamentally analogous to a bottle of ginger beer?
(e) Reasoning by elimination Bryant v Herbert (1877) 3 CPD 389 Court of Appeal (See p 114.)
Notes and questions 1
2 3
Reasoning by elimination consists of examining and applying a complete range of categories, premises or hypotheses and eliminating all those that do not fit, so to speak. Thus the police might be said to reason in this way when they eliminate all potential suspects but one: equally, the doctor who eliminates all the possible diseases save one. Is this a form of logical reasoning? Just how reliable is it? If it is not contract, then it must be tort. But what about unjust enrichment? Read Kingdom of Spain v Christie (below, p 209). Does reasoning by elimination play a role in the judgment?
(f) Reasoning by absurdity Bridge v Campbell Discount Co Ltd [1962] AC 600 House of Lords Lord Denning:… Let no one mistake the injustice of this. It means that equity commits itself to this absurd paradox: it will grant relief to a man who breaks his contract but will penalise the man who keeps it. If this be the state of equity today, then it is in sore need of an overhaul so as to restore its first principles. R v Self [1992] 1WLR 657 Court of Appeal (See p 224.)
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(g) Reasoning by holistic analysis Hall v Lorimer [1992] 1 WLR 939 Queen’s Bench Mummery J:… In order to decide whether a person carries on business on his own account it is necessary to consider many different aspects of that person’s work activity. This is not a mechanical exercise of running through items on a check list to see whether they are present in, or absent from, a given situation. The object of the exercise is to paint a picture from the accumulation of detail. The overall effect can only be appreciated by standing back from the detailed picture which has been painted, by viewing it from a distance and by making an informed, considered, qualitative appreciation of the whole. It is a matter of evaluation of the overall effect of the detail, which is not necessarily the same as the sum total of the individual details. Not all details are of equal weight or importance in any given situation. The details may also vary in importance from one situation to another.
Questions 1 2 3
4
Is Mummery J rejecting logic as the reasoning method in this particular case? Were the judges in Re Rowland (above, p 166) painting pictures? Is the method being proposed by Mummery J very different from that proposed by Lord Simon in the Lupton case (above, p 183)? Do you think they are two different methods appealing to different aspects of the mind? Do humans think in terms of pictures? What is the relationship, if any, between visual imagery, symmetry and logic? To what extent does the syllogism use visual imagery as its means of operation?
(h) Reasoning by individualistic analysis Rickards v Lothian [1913] AC 263 Privy Council This was an unsuccessful action for damages in respect of damage done to the claimant’s goods as a result of water overflowing from the defendant’s flat. The overflow had been caused by the malicious act of some third person who had blocked the outlet of the defendant’s basin. The plaintiff did not allege fault on the part of the defendant, but based his claim on the strict liability rule in Rylands v Fletcher [see p 660]. Lord Moulton:… Their Lordships…are of opinion that a defendant is not liable on the principle of Fletcher v Rylands for damage caused by the wrongful acts of third persons… … The provision of a proper supply of water to the various parts of a house is not only reasonable, but has become, in accordance with modern sanitary views, an almost necessary feature of town life. It is recognised as being so desirable in the interests of the community that in some form or other it is 188
Legal Method and the Common Law usually made obligatory in civilised countries. Such a supply cannot be installed without causing some concurrent danger leakage or overflow. It would be unreasonable for the law to regard those who install or maintain such a system of supply as doing so at their own peril, with an absolute liability for any damage resulting from its presence even when there has been no negligence… Dunne v North Western Gas Board [1964] 2 QB 806 Court of Appeal This was an unsuccessful action for damages in respect of personal injuries suffered by the claimant as a result of a gas explosion in the street. The claimant based his claim in nuisance and on the strict liability rule in Rylands v Fletcher [see p 660]. Sellers LJ:… Gas, water and also electricity services are well-nigh a necessity of modern life, or at least are generally demanded as a requirement for the common good, and one or more are being taken with considerable despatch to every village and hamlet in the country with either statutory compulsion or sanction. It would seem odd that facilities so much sought after by the community and approved by their legislators should be actionable at common law because they have been brought to places where they are required and have escaped without negligence by an unforeseen sequence of mishaps. A sequence of events may be just as unforeseeable and unavoidable and as extraneous to an individual or a supplier of services as an act of God is recognised to be… Roe v Minister of Health [1954] 2 QB 66 Court of Appeal (Seep 393.)
Notes and questions 1
2
Although there is much talk of the community interest in these three cases, the judges are actually envisaging society only in terms of individuals. If the individual suffers harm he or she is entitled to compensation only if it can be proved that the harm was caused by the blameworthy act of another person. This is, in Professor Berthelot’s scheme, very much the causal and actional analysis (see above, pp 169–77). It is an example of ‘methodological individualism’. The French, as we have seen (p 103), take a very different approach, at least in public law. They start off from the same premise as Lord Mouton and Sellers LJ, that public services benefit the community, but they use it as a reason for imposing liability without fault. If the community enjoys the benefits, then it is the community that should carry the burdens. Such burdens are shared amongst the community by compensating out of public funds the individual who has suffered damage. Is this a more just system? Read Watt v Hertfordshire CC [1954] 1 WLR 835 in the law report. Does Denning LJ take a similar approach to Sellers LJ?
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Ought God to be blamed for a gas explosion which blows a girl off her bicycle and injures others playing in the street?
(i) Reasoning by analogy Stocks v Magna Merchants Ltd [1973] 2 All ER 329 Queen’s Bench Division Arnold J:… There is no authority on the point and the parties agree that it is a matter of principle, that is that it falls to be determined by reference to the proper method of assessing damages in such a case as the present… The present question, in my judgment, falls to be answered in favour of the plaintiff if the redundancy payment in quality and, in particular, as regards its remoteness or proximity in relation to the dismissal of the plaintiff is analogous to a retirement pension, or predominantly analogous to that, but in favour of the defendants if it is analogous, or predominantly analogous, in those respects to unemployment benefit… My view is that there is a closer analogy, as regards remoteness or proximity to the dismissal of the plaintiff, between the payment of unemployment benefit and the payment of a sum for redundancy under the 1965 Act than there is between the payment of a retirement pension and a redundancy payment. Consequently, in my judgment…the right conclusion here is that the amount of the redundancy payment does fall to be deducted in calculating the damages payable by the defendants to the plaintiff… The Mediana [1900] AC 113 House of Lords Earl of Halsbury LC:… Now, in the particular case before us...the broad proposition seems to me to be that by a wrongful act of the defendants the plaintiffs were deprived of their vessel. When I say deprived of their vessel, I will not use the phrase ‘the use of the vessel’. What right has a wrongdoer to consider what use you are going to make of your vessel? More than one case has been put to illustrate this: for example, the owner of a horse, or of a chair. Supposing a person took away a chair out of my room and kept it for 12 months, could anybody say you had a right to diminish the damages by showing that I did not usually sit in that chair, or that there were plenty of other chairs in the room? The proposition so nakedly stated appears to me to be absurd… Butler Machine Tool Co Ltd v Ex-Cell-O Corporation [1979] 1 WLR 401 Court of Appeal (See also p 430.) Lord Denning MR:… Applying this guide, it will be found that in most cases when there is a ‘battle of forms’ there is a contract as soon as the last of the forms is sent and received without objection being taken to it… The difficulty is to decide which form, or which part of which form, is a term or condition of the contract. In some cases the battle is won by the man who fires the last shot. He is the man who puts forward the latest terms and conditions: and, if
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Legal Method and the Common Law they are not objected to by the other party, he may be taken to have agreed to them… In some cases, however, the battle is won by the man who gets the blow in first… There are yet other cases where the battle depends on the shots fired on both sides… Lawton LJ:… In my judgment, the battle has to be conducted in accordance with set rules. It is a battle more on classical 18th century lines when convention decided who had the right to open fire first rather than in accordance with the modern concept of attrition… White v Jones [1995] 2 AC 207 House of Lords (See p 702.) Lord Browne-Wilkinson:… In my view, although the present case is not directly covered by the decided cases, it is legitimate to extend the law to the limited extent proposed using the incremental approach by way of analogy advocated in Carparo Industries plc v Dickman [1990] 2 AC 605… … In my judgment, this is a case where such development should take place since there is a close analogy with existing categories of special relationship giving rise to a duty of care to prevent economic loss… X (Minors) v Bedfordshire County Council [1995] 2 AC 633 House of Lords (See p 727.) Lord Browne-Wilkinson:… Like the majority in the Court of Appeal, I cannot accept these arguments. The social workers and the psychiatrists were retained by the local authority to advise the local authority, not the plaintiffs. The subject matter of the advice and activities of the professionals is the child. Moreover the tendering of any advice will in many cases involve interviewing and, in the case of doctors, examining the child. But the fact that the carrying out of the retainer involves contact with and relationship with the child cannot alter the extent of the duty owed by the professionals under the retainer from the local authority. The Court of Appeal drew a correct analogy with the doctor instructed by an insurance company to examine an applicant for life insurance. The doctor does not, by examining the applicant, come under any general duty of medical care to the applicant. He is under a duty not to damage the applicant in the course of the examination: but beyond that his duties are owed to the insurance company and not to the applicant… Goodwill v British Pregnancy Advisory Service [1996] 1 WLR 1397 Court of Appeal (See p 722.) Peter Gibson LJ:… Miss Booth also relied on White v Jones [1995] 2 AC 207 as providing an example of an analogous situation in which a duty of care has been recognised. In that case a solicitor who was instructed to prepare a will but delayed in carrying out his instructions was held to owe a duty of care to the intended beneficiaries. She submitted that a woman who had a sexual relationship with Mr MacKinlay is in an analogous position to the intended beneficiaries under the will, because just as the solicitor was employed to
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Notes and questions 1 2
3
4 5 6
Is war a useful analogy through which to understand contractual relationships? Does such an analogy capture the spirit of the PECL? ‘Perhaps…the most that can be attempted is a broad categorisation of the decided cases according to the type of situation in which liability has been established in the past in order to found an argument by analogy’ (Lord Oliver in Caparo Industries plc v Dickman [1990] 2 AC 605, p 635). Does this mean that English case law is not actually about the induction of general principles of liability? The owner or keeper of…an animal has an absolute duty to confine and control it so that it shall not do injury to others… But such an exceptional case as this affords no justification for its extension by analogy’ (Lord MacMillan in Read v J Lyons and Co [1947] AC 156, p 171). Why? Is reasoning by analogy a form of painting a picture along the lines suggested in Hall v Lorimer (above, p 188)? Are metaphors forms of analogy? Why should a rule applicable to a chair also be applicable to a lightship? Are they not entirely different kinds of property? Why would it be absurd for a defendant who mistakenly deprived an owner of one of his chairs to argue that the owner had suffered no damage?
(j) Reasoning by metaphor Spartan Steel and Alloys Ltd v Martin and Co (Contractors) Ltd [1973] 1 QB 27 Court of Appeal (See also p 194.) Lord Denning MR:… I do not like this doctrine of ‘parasitic damages’. I do not like the very word ‘parasite’. A ‘parasite’ is one who is a useless hangeron sucking the substance out of others. ‘Parasitic’ is the adjective derived from it. It is a term of abuse. It is an opprobrious epithet. The phrase ‘parasitic damages’ conveys to my mind the idea of damages which ought not in justice to be awarded, but which somehow or other have been allowed to get through by hanging on to others. If such be the concept underlying the doctrine, then the sooner it is got rid of the better…
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Questions 1 2 3 4
If Lord Denning finds parasitic damages so offensive, why does he allow the plaintiff in Jackson v Horizon Holidays (below, p 220) to recover them? Is this reasoning through painting a picture? Is Lord Denning proposing a reason or putting forward an argument? Read MG Duncan, In slime and darkness’ (1994) 68 Tulane LR 725. Are metaphors central to our understanding of criminal law?
(k) Appeal to values Christie v Leachinsky [1947] AC 573 House of Lords Viscount Simon:… No one, I think, would approve a situation in which when the person arrested asked for the reason, the policeman replied ‘that has nothing to do with you: come along with me’. Such a situation may be tolerated under other systems of law, as for instance in the time of lettres de cachet in the 18th century in France, or in more recent days when the Gestapo swept people off to confinement under an over-riding authority which the executive in this country happily does not in ordinary times possess. This would be quite contrary to our conceptions of individual liberty… Parry v Cleaver [1970] AC 1 House of Lords Lord Reid:… It would be revolting to the ordinary man’s sense of justice, and therefore contrary to public policy, that the sufferer should have his damages reduced so that he would gain nothing from the benevolence of his friends or relations or of the public at large, and that the only gainer would be the wrongdoer.
Notes and questions 1
‘In practical terms the effectiveness of a legal argument is tied to its conformity with the values held by the person to whom it is addressed. It presupposes a tacit, but vital, accord on the values held by society in whose name the judge renders justice. This accord has to be carried even as far as the hierarchy established between these values. There are the “universal hierarchies: the values relative to persons are superior to the values relative to things; a man is not to be run over in order to avoid a dog; a human life is worth more than private property”. And the “hierarchies that are often said to be social: the testimony of a retired general is worth more, in support of a proposition, than that of an active tramp”’ [Bredin] (Ghestin and Goubeaux, Traité de droit civil: introduction generate, 3rd edn, 1990, LGDJ, pp 46–47). Has the criminal law always accepted that human life is worth more than private property? To what extent does the law of tort put human life before economic interests? 193
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‘There are several good things in life, such as liberty, bodily integrity, land, possessions, reputation, wealth, privacy, dignity, perhaps even life itself. Lawyers call these goods “interests”. These interests are all good, but they are not all equally good. This is evident when they come into conflict (one may jettison cargo to save passengers, but not vice versa, and one may detain a thing, but not a person, as security for a debt). Because these interests are not equally good, the protection afforded to them by the law is not equal: the law protects the better interests better. Accordingly, the better the interest invaded, the more readily does the law give compensation for that harm. In other words, whether you get the money you claim depends on what you are claiming it for. It would be surprising if it were otherwise’ (Weir, A Casebook on Tort, 7th edn, 1992, Sweet & Maxwell, pp 4–5). Does English law protect bodily integrity better than it protects reputation? Is it easier for an employer to obtain compensation for financial loss caused by a uncaring workers going on strike than it is for a worker to obtain compensation for personal injury caused by an uncaring employer? Compare Blackpool and Fylde (p 436) with X (Minors) (p 727). If the results of these two cases are compared in terms of values, does it mean that the law gives greater protection to commercial interests than to the interests of children? Do s 2(1) of the Unfair Contract Terms Act 1977, and s 5(1) of the Consumer Protection Act 1987 reflect values?
(l) Appeal to policy Spartan Steel and Alloys Ltd v Martin and Co (Contractors) Ltd [1973] 1 QB 27 Court of Appeal This was an action for damages by the owners of a factory against a firm of contractors for damage and loss suffered when the supply of electricity was cut off as a result of the contractors, while excavating with a mechanical shovel on the highway, carelessly cutting through an electric cable. The factory owners claimed damages under three heads: (i) damage to metal in a furnace when the power failed; (ii) loss of profit on the ruined metal in the furnace; (iii) loss of profit on four other metal melting operations that could have been carried out if the electricity had not been off. A majority of the Court of Appeal held that the plaintiffs could recover under heads (i) and (ii), but not under head (iii). Lord Denning MR:… At bottom I think the question of recovering economic loss is one of policy. Whenever the courts draw a line to mark out the bounds of duty, they do it as matter of policy so as to limit the responsibility of the defendant. Whenever the courts set bounds to the damages recoverable— saying that they are, or are not, too remote—they do it as matter of policy so as to limit the liability of the defendant.
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Legal Method and the Common Law In many of the cases where economic loss has been held not to be recoverable, it has been put on the ground that the defendant was under no duty to the plaintiff. Thus where a person is injured in a road accident by the negligence of another, the negligent driver owes a duty to the injured man himself, but he owes no duty to the servant of the injured man—see Best v Samuel Fox and Co Ltd: nor to the master of the injured man—Inland Revenue Commissioners v Hambrook: nor to anyone else who suffers loss because he had a contract with the injured man—see Simpson and Co v Thomson: nor indeed to anyone who only suffers economic loss on account of the accident: see Kirkham v Boughey. Likewise, when property is damaged by the negligence of another, the negligent tortfeasor owes a duty to the owner or possessor of the chattel, but not to one who suffers loss only because he had a contract entitling him to use the chattel or giving him a right to receive it at some later date: see Elliott Steam Tug Co Ltd v Shipping Controller and Margarine Union GmbH v Cambay Prince Steamship. In other cases, however, the defendant seems clearly to have been under a duty to the plaintiff, but the economic loss has not been recovered because it is too remote. Take the illustration given by Blackburn J in Cattle v Stockton Waterworks Co, when water escapes from a reservoir and floods a coal mine where many men are working. Those who had their tools or clothes destroyed could recover: but those who only lost their wages could not. Similarly, when the defendants’ ship negligently sank a ship which was being towed by a tug, the owner of the tug lost his remuneration, but he could not recover it from the negligent ship: though the same duty (of navigation with reasonable care) was owed to both tug and tow: see Société Anonyme de Remorquage Hélice v Bennetts. In such cases if the plaintiff or his property had been physically injured, he would have recovered: but, as he only suffered economic loss, he is held not entitled to recover. This is, I should think, because the loss is regarded by the law as too remote: see King v Phillips. On the other hand, in the cases where economic loss by itself has been held to be recoverable, it is plain that there was a duty to the plaintiff and the loss was not too remote. Such as when one ship negligently runs down another ship, and damages it, with the result that the cargo has to be discharged and reloaded. The negligent ship was already under a duty to the cargo-owners: and they can recover the cost of discharging and reloading it, as it is not too remote: see Morrison Steamship Co Ltd v Grey stoke Castle (Cargo-owners). Likewise, when a banker negligently gives a reference to one who acts on it, the duty is plain and the damage is not too remote: see Hedley Byrne and Co Ltd v Heller and Partners Ltd. The more I think about these cases, the more difficult I find it to put each into its proper pigeon-hole. Sometimes I say: There was no duty’. In others I say: The damage was too remote’. So much so that I think the time has come to discard those tests which have proved so elusive. It seems to me better to consider the particular relationship in hand, and see whether or not, as a matter of policy, economic loss should be recoverable, or not. Thus in Weller and Co v Foot and Mouth Disease Research Institute it was plain that the loss suffered by the auctioneers was not recoverable, no matter whether it is put on the ground that there was no duty or that the damage was too remote. Again in Electrochrome Ltd v Welsh Plastics Ltd, it is plain that the economic
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Sourcebook on Obligations and Remedies loss suffered by the plaintiffs’ factory (due to the damage to the fire hydrant) was not recoverable, whether because there was no duty or that it was too remote… The second consideration is the nature of the hazard, namely, the cutting of the supply of electricity. This is a hazard which we all run. It may be due to a short circuit, to a flash of lightning, to a tree falling on the wires, to an accidental cutting of the cable, or even to the negligence of someone or other. And when it does happen, it affects a multitude of persons; not as a rule by way of physical damage to them or their property, but by putting them to inconvenience, and sometimes to economic loss. The supply is usually restored in a few hours, so the economic loss is not very large. Such a hazard is regarded by most people as a thing they must put up with—without seeking compensation from anyone. Some there are who install a stand-by system. Others seek refuge by taking out an insurance policy against breakdown in the supply. But most people are content to take the risk on themselves. When the supply is cut off, they do not go running round to their solicitor. They do not try to find out whether it was anyone’s fault. They just put up with it. They try to make up the economic loss by doing more work next day. This is a healthy attitude which the law should encourage… Edmund Davies LJ (dissenting):… For my part, I cannot see why the £400 loss of profit here sustained should be recoverable and not the £1,767. It is common ground that both types of loss were equally foreseeable and equally direct consequences of the defendants’ admitted negligence, and the only distinction drawn is that the former figure represents the profit lost as a result of the physical damage done to the material in the furnace at the time when power was cut off. But what has that purely fortuitous fact to do with legal principle? In my judgment, nothing… Barclays Bank v O’Brien [1992] 3 WLR 593 Court of Appeal [1994] 1 AC 180 House of Lords (See also p 256.) Scott LJ (Court of Appeal):… These authorities seem to me to leave the developing law, if not at the crossroads, at least at the junction of two diverging roads… The choice between the two roads cannot, in my opinion, be made simply by reference to binding authority. Binding authority can be found to justify either. The choice should, I think, be a matter of policy. Ought the law to treat married women who provide security for their husband’s debts, and others in an analogous position, as requiring special protection? The position of married women today, both generally and vis à vis their husbands, is very different from what it was… But…in the culturally and ethnically mixed community in which we live, the degree of emancipation of women is uneven. Lord Browne-Wilkinson (House of Lords):… On the other hand, it is important to keep a sense of balance in approaching these cases. It is easy to allow sympathy for the wife who is threatened with the loss of her home at the suit of a rich bank to obscure an important public interest, viz, the need to ensure that the wealth currently tied up in the matrimonial home does not become economically sterile. If the rights secured to wives by the law renders
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‘In previous times, when faced with a new problem, the judges have not openly asked themselves the question: what is the best policy for the law to adopt? But the question has always been there in the background. It has been concealed behind such questions as: Was the defendant under a duty to the plaintiff? Was the relationship between them sufficiently proximate? Was the injury direct or indirect? Was it foreseeable, or not? Was it too remote? And so forth’ (Lord Denning MR in Dutton v Bognor Regis UDC [1972] 1 QB 373, p 397). Does an appeal to ‘policy’ really help decide cases? Are not judges usurping the role of politicians? ‘Of course, every rule of law is a legal manifestation of public policy. But your Lordships are…instantly concerned with “public policy” in a narrower sense—namely, consideration of social interests beyond the purely legal which call for the modification of a normal legal rule…’ (Lord Simon in D v NSPCC [1978] AC 171, p 235). Is policy simply the link between the notion of a legal rule and the notion of an interest? ‘But suppose…that a judge successfully justifies a decision in a hard case, like Spartan Steel, on grounds not of policy but of principle. Suppose, that is, that he is able to show that the plaintiff has a right to recover its damages… [A]n argument of principle fixes on some interest presented by the proponent of the right it describes, an interest alleged to be of such a character as to make irrelevant the fine discriminations of any argument of policy that might oppose it. A judge who is insulated from the demands of the political majority whose interests the right would trump is, therefore, in a better position to evaluate the argument… The rights thesis…provides a more satisfactory explanation of how judges use precedent in hard cases than the explanation provided by any theory that gives a more prominent place to policy… The rights thesis provides that judges decide hard cases by confirming or denying concrete rights…’ (Dworkin, Taking Rights Seriously, 1977, Duckworth, pp 85, 87,101,116–17). Dworkin talks of rights, but then switches to the notion of an interest: is he not undermining his own argument? Is there not a major difference between rights and interests? If the law endows some interest with the status of a right, is this not a matter of policy? Do English lawyers, as far as tort cases are concerned at any rate, think in terms of rights?
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(m) Appeal to certainty Fothergill v Monarch Airlines Ltd [1981] AC 251 House of Lords Lord Diplock:… Elementary justice or…the need for legal certainty demands that the rules by which a citizen is to be bound should be ascertainable by him (or, more realistically, by a competent lawyer advising him)… The Chikuma [1981] 1 WLR 314 House of Lords Lord Bridge:… It has often been pointed out that shipowners and charterers bargain at arm’s length. Neither class has such a preponderance of bargaining power as to be in a position to oppress the other. They should be in a position to look after themselves by contracting only on terms which are acceptable to them. Where, as here, they embody in their contracts common form clauses, it is, to my mind, of overriding importance that their meaning and legal effect should be certain and well understood. The ideal at which the courts should aim, in construing such clauses, is to produce a result, such that in any given situation both parties seeking legal advice as to their rights and obligations can expect the same clear and confident answer from their advisers and neither will be tempted to embark on long and expensive litigation in the belief that victory depends on winning the sympathy of the court. This ideal may never be fully attainable, but we shall certainly never even approximate to it unless we strive to follow clear and consistent principles and steadfastly refuse to be blown off course by the supposed merits of individual cases. White v Jones [1995] 2 AC 207 House of Lords (See p 702.) Lord Mustill (dissenting):… A broad new type of claim may properly be met by a broad new type of rationalisation, as happened in Hedley Byrne; but rationalisation there must be, and it does not conduce to the orderly development of the law, or to the certainty which practical convenience demands, if duties are simply conjured up as a matter of positive law, to answer the apparent justice of an individual case. Be that as it may, the present case does not as it seems to me concern a unique and limited situation, where a remedy might be granted on an ad hoc basis without causing serious harm to the general structure of the law; for I cannot see anything sufficiently special about the calling of a solicitor to distinguish him from others in a much broader category. If the claim in the present case is sound, for any reasons other than those given by my noble and learned friends, it must be sound in every instance of the general situation which I have already identified, namely: where A promises B for reward to perform a service for B, in circumstances where it is foreseeable that performance of the service with care will cause C to receive a benefit, and that failure to perform it may cause C not to receive that benefit. To hold that a duty exists, even prima facie, in such a situation would be to go far beyond anything so far contemplated by the law of negligence…
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(n) Appeal to symmetry Read v J Lyons and Co [1947] AC 156 House of Lords (See p 662.) Lord Simonds:… My Lords, it was urged by counsel for the appellant that a decision against her when the plaintiff in the Rainham case succeeded would show a strange lack of symmetry in the law. There is some force in the observation. But your Lordships will not fail to observe that such a decision is in harmony with the development of a strictly analogous branch of the law, the law of nuisance, in which also negligence is not a necessary ingredient in the case… To confine the rule in Rylands v Fletcher…appears to me consistent and logical.
Questions 1 2 3
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What is meant by ‘symmetry in the law’? What is the relationship between symmetry and (a) reasoning by syllogism; and (b) reasoning by analogy? ‘L’article 1384 [du Code civil]…retrouve sa symétrie’ (Ghestin J, Note, sub Ass plén, 29 mars 1991, JCP 1991 11.21673 no 1). Discuss. Could such an observation ever be made of a common law decision? Is there a symmetry between Art 1382 and Art 1384 of the Code civil? If so, what is the effect of an absence of such symmetry in other legal systems? Does symmetry play a role in legal theory? Is the symmetry of the German Civil Code (BGB) similar to that of the French Civil Code? What about the new Dutch Civil Code—does this have a quite different symmetry? Is symmetry in law (and/or legal theory) capable of acting as an object in itself of legal knowledge? Is symmetry important in the understanding of analogies and metaphors?
(o) Practical reasoning The Eurymedon [1975] AC 154 Privy Council Lord Wilberforce:… If the choice, and the antithesis, is between a gratuitous promise and a promise for consideration, as it must be, in the absence of a tertium quid, there can be little doubt which, in commercial reality, this is… English law, having committed itself to a rather technical and schematic doctrine of contract, in application takes a practical approach, often at the cost of forcing the facts to fit uneasily into the marked slots of offer, acceptance and consideration…
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Sourcebook on Obligations and Remedies RH Willis and Son v British Car Auctions [1978] 2 All ER 392 Court of Appeal Lord Denning MR:… This system is the commercial way of doing justice between the parties. It means that all concerned are protected. The true owner is protected by the strict law of conversion. He can recover against the innocent acquirer and the innocent handler. But those innocents are covered by insurance so that the loss is not borne by any single individual but spread through the community at large. Ex p King [1984] 3 All ER 897 Court of Appeal Griffiths LJ:... [T]he common law of England has not always developed on strictly logical lines, and where logic leads down a path that is beset with practical difficulties the courts have not been frightened to turn aside and seek the pragmatic solution that will best serve the needs of society. Smith v Eric Bush [1990] 1 AC 831 House of Lords Lord Templeman:... The public are exhorted to purchase their homes and cannot find houses to rent... In these circumstances it is not fair and reasonable for building societies and valuers to agree together to impose on purchasers the risk of loss arising as a result of incompetence or carelessness on the part of valuers. Re Grosvenor [1944] Ch 138 Court of Appeal Lord Greene MR:… The statement that time is infinitely divisible was said to be a scientific fact. I should prefer to call it a metaphysical conception. No doubt, when a bevy of angels is performing saltatory exercises on the point of a needle it is always possible to find room for one more, but propositions of this character appear to me to be ill suited for adoption by the law of this country which proceeds on principles of practical common sense. Re Dick [1953] Ch 343 Court of Appeal Evershed MR:… I confess that I have found the case one of most vexing difficulty, and I have been conscious of some vacillation and many doubts during the course of the careful arguments to which we have listened. I have, however, come to the conclusion that I cannot hold that the judge wrongly determined the issue presented to him, and my doubts have been, perhaps, assuaged by the circumstance that my two brethren have felt, perhaps with less nervousness than I, that the conclusion reached is right. X Ltd v Morgan-Grampian plc [1990] 2 WLR 421 Court of Appeal Lord Donaldson MR:… Lord Hailsham once said that ‘the rule of law is a confidence trick’. What he meant was that the rule of law depends upon public confidence and public acceptance of the system whereby Parliament makes the laws, the courts enforce them and the vast majority of citizens accept them until they can get them changed. The stance of the journalists’ profession in relation to this particular law, of which it happens to disapprove, threatens this confidence and acceptance. This, surely, is contrary to the highest possible public interest.
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Legal Method and the Common Law Kingdom of Spain v Christie, Manson and Woods Ltd [1986] 1 WLR 1120 Chancery Division (See p 209.) Sir Nicolas Browne-Wilkinson VC:… In the pragmatic way in which English law has developed, a man’s legal rights are in fact those which are protected by a cause of action. It is not in accordance, as I understand it, with the principles of English law to analyse rights as being something separate from the remedy given to the individual… [I]n my judgment, in the ordinary case to establish a legal or equitable right you have to show that all the necessary elements of the cause of action are either present or threatened… Hill v CA Parsons and Co Ltd [1972] Ch 305 Court of Appeal Lord Denning MR:… The judge said that he felt constrained by the law to refuse an injunction. But that is too narrow a view of the principles of law. He has overlooked the fundamental principle that, whenever a man has a right, the law should give a remedy. The Latin maxim is ubi jus ibi remedium. This principle enables us to step over the trip-wires of previous cases and to bring the law into accord with the needs of today… News of the World Ltd v Friend [1973] 1 All ER 422 House of Lords Lord Simon: My Lords, the philosopher FH Bradley described metaphysics as the finding of bad reasons for what we believe on instinct. An opinion on a short point of construction is apt to be the rationalisation of a first impression; and I am all the more conscious of Bradley’s jibe when I find myself differing from my noble and learned friends whose judgment I deeply respect…
Notes and questions 1
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‘If patriotism is the last refuge of the scoundrel, then common sense must be the last refuge of the incompetent… Common sense is a quintessentially English obsession. It suits the English self-image to suppose that in any area of life and experience there is a corpus of plain, simple, unadorned, instinctive ways of doing things… Nothing fancy is how we like it. Nothing intellectual. Nothing continental. British common sense is, of course, particularly sensible’ (Kettle (1994) The Guardian, 19 February, p 25). Is this a fair comment in respect of some forms of reasoning in English courts? What do you think Lord Wilberforce means by ‘commercial reality’? Does such a notion imply ‘commercial unreality’? Industry lobbied against strict liability in the area of products: were they advocating a position based on ‘commercial reality’? Is, then, the Consumer Protection Act 1987 founded on commercial unreality? It turned out that as a matter of human rights the journalist was justified (see p 292). Does this mean that it is judges like Lord Donaldson who are undermining the public interest? If law is a confidence trick, what does this say about legal reasoning? Is Lord Donaldson’s observation of much
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help to the law student? Is freedom of the press not the highest possible public interest? What is meant by ‘justice’ in Lord Diplock’s and Lord Reid’s comment? What does Lord Denning mean by ‘commercial justice’? What is the relationship between justice and commercial justice? In White v Jones (p 702), Lord Goff talks of ‘practical justice’: is this something different from justice and commercial justice? Can you reconcile the approach of Browne-Wilkinson VC in Christie with that of Lord Denning in Parsons? Is the approach of Browne-Wilkinson VC ubi remedium ibi jus? Can you list the various different types of arguments and reasons set out in this sub-section on practical reasoning? How do they relate to each other and to the other methodologies set out in this chapter? Is there a difference between reasoning, argumentation and justification? How would you classify the various statements in this section on legal reasoning? ‘[A] theory dealing with human facts is constantly menanced, if one is not careful, with becoming an ideology, substituting myths for concepts and prescriptions for descriptions’ (Granger, La science et les sciences, 1995, PUF, p 99). Discuss in relation to the judicial statements set out in this chapter. Is Dworkin’s chain novel thesis in danger of reducing legal method to a ‘mythical’, rather than ‘scientific’, process?
9 INTERPRETATION OF TEXTS Staffordshire Area Health Authority v South Staffordshire Waterworks Co [1978] 1 WLR 1387 (Seep 595.) Genossenschaftsbank v Burnhope [1995] 1 WLR 1580 House of Lords This was an action by a bank against an insurance company for an indemnity in respect of a large sum of money lost to the bank by a fraud. The insurance policy stated that the company would indemnify the bank in respect of property lost through ‘theft…or false pretences, committed by persons present on the premises’. The fraud had not involved the thief actually being present on the premises—the chairman of the company who masterminded the fraud (Mr Smith) had used an innocent agent—and thus the insurance company refused to pay. On the preliminary question of whether the bank had a good cause of action against the insurance company, a majority of the House of Lords decided that the bank did not have a good claim. Lord Keith:… The criminal offence of theft was committed by Mr Smith and through him by the company. On the natural and ordinary meaning of the
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Notes and questions 1
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It is to be doubted whether a separate section on interpretation of written texts is really necessary. For interpretation often involves the kind of reasoning devices and arguments set out in the previous section (see, for example, Harbour Assurance, p 185) and the application of a text to a set of facts raises the kind of issues set out in the section on law and fact (see, for example, Re Rowland, p 166). Nevertheless, the relationship between law and language is a special one and thus requires lawyers and judges to switch into what Berthelot has described as one of the oldest schemes of intelligibility (see above, pp 169–77). And given that, on the continent, all legal reasoning is, in theory, statutory interpretation, one can understand how some theorists see legal method as nothing more nor less than a hermeneutical exercise. Hopefully, this chapter has indicated that things are more complicated. Yet there is no doubt that the interpretation of wills, contracts and statutory texts is a central activity of judges. Could one go further and say, like Dworkin, that even when judges are dealing with unwritten law, the scheme of intelligibility is still hermeneutical? If so, what assumption is being made about law as a form of knowledge? ‘Traditional rule systems are brittle, and can be made to capture…detailed phenomena only awkwardly (for example, by having a separate rule for each ‘exception’)… Rules and symbols have their most obvious use in building higher-level models that abstract away from many of the detailed phenomena exhibited in behavioural data. When the details are not needed these are the models of choice (at least for description); but to model the actual mechanisms of cognition, more detailed, less brittle models are needed…[T]he behaviour of the cognitive system is not rulegoverned, but rather is only (approximately) rule-described’ (Bechtel and Abrahamsen, Connectionism and the Mind, 1991, Blackwell, p 227). Is the role of the judge simply to apply the rules? When one argues about causes of actions and rights is one arguing about rules? Is knowledge of law knowledge of rules? Is the result in Genossenschaftsbank an example of the courts refusing to look beyond the words of the contract? Does the case involve, equally, the institution of persona? When a court is interpreting a word like ‘reasonable’, is it involved in a different exercise from when it is interpreting a word such as ‘road’? In English law, statutory interpretation has traditionally been seen in terms of three rules: the literal rule, the golden rule and the mischief rule. Have the courts now moved beyond these three rules? 204
Legal Method and the Common Law Young v Sun Alliance and London Insurance Ltd [1977] 1 WLR 104 Court of Appeal This was a claim by a householder for an indemnity under his household insurance in respect of the expense incurred in remedying an ingress of water into his bathroom which left the room covered in three inches of water. The claim was rejected by the Court of Appeal. Shaw LJ:… The plaintiff appeals to this court on the ground that the judge erred in his construction of the word ‘flood’ in the context in which it appeared in the policy. Mr Jacob has put before this court a most able argument, and an almost persuasive one, to the effect that in this context, notwithstanding the juxtaposition of those three words, ‘storm, tempest or flood’, which appear to denote different forms of violent manifestation of some natural phenomenon, ‘flood’ here, when one is considering its application in relation to a private dwelling, ought to be construed in a wide rather than a narrow sense. First because the language was adopted by the insurers so that the contra proferentem principle should apply, and secondly because, so far as a householder is concerned, if he finds that in part of his property he cannot walk about except by putting his feet into three inches of water, and if that happens in a significant part of his property, then he is entitled to say that it has been flooded; and if any damage results from it, the damage has resulted from or has been caused by flood. At first sight—or perhaps I should say at second sight having heard Mr Jacob’s argument—that appears to be a plausible proposition. But on further consideration it seems apparent that what the policy was intending to cover, whatever may be the colloquial use of the word ‘flood’ in common parlance, were three forms of natural phenomena which were related not only by the fact that they were natural, but also that they were unusual manifestations, certainly of those phenomena: that is to say, ‘storm’ meant ‘rain accompanied by strong wind’; ‘tempest’ denoted an even more violent storm; and ‘flood’ was not something which came about by seepage or by trickling or dripping from some natural source, but involved ‘an overflowing or irruption of a great body of water’ as one of the definitions in the Shorter Oxford English Dictionary, 3rd edn, 1944, puts it. The slow movement of water, which can often be detected so that the loss threatened can be limited, is very different from the sudden onset of water where nothing effective can be done to prevent the loss, for it happens too quickly. It is because the word ‘flood’ occurs in the context it does, that I have come to the conclusion that one must go back to first impressions, namely, that it is used there in the limited rather than the wider sense; that it means something which is a natural phenomenon which has some element of violence, suddenness or largeness about it. If that is the right view, it disposes of the matter. It is the view which was taken by the judge, who expressed very much the same idea about the meaning of the word ‘flood’ in this connection. I see no reason, after reflection, to differ from the judge, and accordingly I would dismiss the appeal.
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Sourcebook on Obligations and Remedies Lawton LJ: This appeal raises a semantic problem which has troubled many philosophers for centuries, and it can, I think, be expressed in the aphorism that an elephant is difficult to define but easy to recognise. I find difficulty in defining the word ‘flood’ as used in this policy; I have no difficulty in looking at the evidence in this case and coming to the conclusion, as I do, that the water in the lavatory was not a flood within the meaning of para 8 of this policy. Mr Day pointed out to the court that the phrase in the policy is ‘storm, tempest or flood,’ and that the word ‘flood’ is used as a word in ordinary English usage to cover a situation which may be very different from the situations to which the words ‘flooded’ or ‘flooding’ are appropriate. I agree. It is not without relevance that para 9, the next paragraph in the policy, refers to the ‘escape of water from or frost damage to any water, drainage or heating installation’. So ‘flood’ is something different for the purposes of this policy from an ‘escape of water’. I agree with Shaw LJ that the essence of ‘flood’ in ordinary English is some abnormal, violent situation. It may not necessarily have to be sudden, but it does, in my judgment, have to be violent and abnormal. This seepage of water through a rise in the water level was not violent, and it was not all that abnormal; it was the sort of incident which householders sometimes have to suffer as a result of ‘rising damp’. I, too, would dismiss the appeal. Cairns LJ: I also would dismiss the appeal. It is not necessary to decide in this case whether the interpretation of the word ‘flood’ in an insurance policy is a matter of law, or whether the problem is to be approached in the way that Lord Reid in Cozens v Brutus [1973] AC 854, p 861, approached the meaning of the word ‘insulting’, because there is apparently no previous decision of the court as to the meaning of the word ‘flood’ in this context. Therefore, the only way in which one can interpret it is by asking oneself what is the meaning that an ordinary Englishman reading this word in the context in which it appears would give to it. I think in such circumstances one’s first impression may be the best guide to the real meaning. Giving oneself for the moment the credit of assuming that one is an ordinary Englishman, when I first looked at this case my reaction to it was: ‘No; you really could not call this a flood.’ But when one began to analyse it, and to listen to the argument of Mr Jacob, I, like Shaw LJ, was almost persuaded that this could be called a flood. That it could be called a flooded floor, that an ordinary man or an ordinary housewife would say, ‘The water is flooding my floor,’ I have no doubt. But we come back to the question: Is it a flood? Is it a flood in a clause which refers also to ‘storm and tempest’?– which I think, contributes to giving a colour to the meaning of it. I think it is very largely a question of degree. Mr Day made it the main part of his concise argument before us that a flood involved a large quantity of water. That seems to me to be right. I do not think that water three inches deep in a room 6 ft by 4 ft would be regarded by any normal person in the context of this policy as a flood. Therefore, I agree with Shaw and Lawton LJJ that the appeal fails.
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Legal Method and the Common Law
Questions 1
2
3
4
5
What prevented the plaintiff from recovering: (a) the small amount of water; (b) the wording of the policy; or (c) the visual imagination of the judges? Would the result have been different if (a) the whole of the plaintiffs ground floor or (b) the whole of the neighbourhood had been submerged under three inches of water? What if the three inches of water had been caused by excessive rainfall? What if the claimant had taken out his household policy on the basis of a television advertising campaign which stated that the insurance company ‘did not make a drama out of a crisis’: do you think the claimant would have a contractual expectation to be indemnified given the damage he suffered? Imagine that the claimant had said to his partner on seeing the water: ‘the bathroom is flooded’. Would this have been a false description? If not, why, then, was the contra proferentem rule not applied? An elephant is difficult to define but easy to recognise. Does this suggest that knowledge cannot be completely reduced to linguistic propositions? Did the judges stand back and paint a picture (cf above, p 188)? Murray v Foyle Meats Ltd [1999] 3 WLR 356 House of Lords (N Ireland) Lord Clyde: My Lords, it is an elementary rule in the interpretation and the application of statutory provisions that it is to the words of the legislation that attention must primarily be directed. Generally it will be the ordinary meaning of the words which will require to be adopted. On appropriate occasions it may be proper as matter of interpretation to adopt extended meanings to words or phrases, particularly if thereby the purpose of the legislation can be best effected or the validity of the legislation preserved. On other occasions it may be appropriate to adopt a strict or narrow meaning of the language used. But whatever the intensity of the process the temptation of substituting other expressions for the words of the statute in the course of interpreting it is to be discouraged, however attractive such a course may seem to be by way of explaining what it is thought the legislature is endeavouring to say. It may certainly be useful to analyse a statutory provision so as to identify the successive elements of which it is composed and so focus attention on the particular word or words which call for interpretation, or isolate the particular requirements which have to be met for its application… But such an exercise should not involve any significant departure from the actual language which has been used. When it comes to a matter of applying a statutory provision to particular circumstances it may be tempting to devise so called tests for its application. In the context of the particular area of employment law with which the present appeal is concerned the labels of a ‘contract test’ and a ‘function test’ have been identified. But the only test for the application of a statutory provision, such as occurs in the present case, is whether or not on a proper construction of the statutory language the facts which have been established fall within 207
Sourcebook on Obligations and Remedies the provision. I see no advantage in prescribing labels as a means of giving guidance to the method to be adopted in applying the provision. Once the statute has been properly construed its application does not depend upon any test but on the language used and the particular facts and circumstances of the case. On the other hand there is in my view a danger in prescribing and designating tests since they may encourage an approach not intended by the legislator…
Questions 1 2
3
Is Lord Clyde advocating a return to (a) to the literal rule; (b) to the golden rule; or (c) to the mischief rule? Can a word ever be understood outside the context of any particular factual situation? How might Lord Clyde have decided the Young v Sun Alliance case? Using Lord Clyde’s test, would you define a car park as a ‘road’? (Cf Clarke v Cato [1998] 1 WLR…1647.)
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CHAPTERS 3
REMEDIES
1 INTRODUCTION One of the themes to have emerged from the previous chapters is the tension between rights and remedies. According to one judge, it is the entitlement to a remedy that defines the existence of rights, whereas, according to another judge, the idea of a legal right has now liberated itself from the law of actions. Ubi ius ibi remedium. Yet, whatever the actual situation with respect to the relationship between rights and remedies, there is no doubt that English law continues to see the remedy as an active institution in the sense that it is a focal point for legal rules which is capable of operating at the level both of law and of fact. Indeed, it is often the remedy which takes the initiative when it comes to expanding liability (see, for example, Jackson v Horizon Holidays, p 220). Thus, the tendency of the common lawyer is to ask ‘Has my client a remedy?’ rather than ‘Has my client a right to…?’. And, while this thinking is the result of English legal history, as various writers have pointed out, it is not merely a piece of antiquarian thinking and practice. The remedy, being a legal institution (that is, a factual and legal focal point to which rules attach), can act as a vehicle for organising the facts in such a way as they appear to reveal legal rights. This is why a celebrated medieval jurist said of Roman law (which also used the law of actions in an active sense): ‘ex facto ius oritur’ (law arises out of fact). If P is entitled to an injunction (actio) to stop D interfering with P’s live musical performances by illegally recording them, this in itself will both turn the live performances into a form of property and create a legal relationship (dominium) between P and his performances (see Ex p Island Records [19781 1 Ch 122). One does not need a theory of ownership or possession.
2 REMEDIES AND RIGHTS Kingdom of Spain v Christie, Mason and Woods Ltd [1986] 1 WLR 1120 Chancery Division Sir Nicolas Browne-Wilkinson VC: These proceedings relate to an oil painting by Goya called ‘La Marquesa de Santa Cruz’. By an originating summons dated 5 March 1986 the Kingdom of Spain claims certain declarations relating to three documents; two of them are dated 30 March 1983 and the third is dated 5 April 1983. Those three documents purport to 209
Sourcebook on Obligations and Remedies be official documents of the Government of Spain authorising the export of the picture from Spain. The declarations are sought against the first defendant, Christie Manson and Woods Ltd (‘Christie’s’), who is offering the picture for sale at auction in London on 11 April this year on the instructions of the owner of the picture, the second defendant, Overseas Art Investments Ltd (‘OAD’)… At first sight I thought that…if it were established that the picture had been exported from Spain with the use of forged documents, Christie’s, giving effect to that clause, would not have been prepared to auction it. That certainly was the view of the plaintiffs when they started these proceedings. However, in the course of argument counsel for Christie’s made it clear that even if it were to be declared by the court that the documents were forgeries, Christie’s would feel free to continue with the sale. They take the view that [the Dealers’ Code of Practice] does not apply where the vendor has acquired the picture innocently (that is, is not implicated in the illegal export) and that such a case falls to be dealt with under clause 4. Christie’s also apparently take the view that the Spanish Government have refused to agree ‘satisfactory reimbursement’ to OAI. Whether Christie’s are right on either of those views is not for this court to say. The fact is that Christie’s are prepared to and will go ahead with the sale, even if the documents are found by the court to be forgeries. In any event the Code is not a document on which the Spanish Government can directly rely; it is not a party to the Code… Against that background I turn to the law. This is an application to strike out the proceedings before trial. That is an extreme step for a court to take and is only done when it is obvious and clear beyond doubt that the plaintiff has no claim fit to go to trial. To shut out somebody from the judgment seat has been said many times to be an extreme step. Only in exceptional circumstances, therefore, is it right on such an application finally to determine any difficult point of law. Normally, if a case involves sustained argument, it is not a case for striking out but for a preliminary point of law to be set down. In the present case, as will emerge, as the argument went on, the basis of possible resistance to striking out changed, and what at one time might have been thought to have been a plain and obvious case may no longer be so. For the purpose of considering whether a case should be struck out as disclosing no cause of action, it is necessary for the court to assume the truth of the facts alleged by the plaintiffs; but I must emphasise that that is an assumption. The fundamental difficulty in this case is that the plaintiffs have chosen only to claim declarations. They have made no claim against the defendants by way of injunction or for damages. It is clearly established by the authorities that in proceedings for a declaration, other than for judicial review, the court will only make such a declaration in defence of a legal or equitable right of the plaintiff: see Gouriet v Union of Post Office Workers [1978] AC 435, p 501… Obviously in that statement ‘legal rights’ include equitable rights…
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Remedies The defendants in this case contend that the Spanish Government have no rights as against them at all relating to the use of the allegedly forged documents. The central question therefore is what legal or equitable rights do the Spanish Government have in relation to these documents and as against these defendants. During the course of the argument my view has changed more than once. At the outset it seemed to me extraordinary if the law of England provided no civil remedy to a man, whose signature or stamp has been forged on a document, to prevent the continued circulation of that document as a genuine document. If the law provides no such remedy for a citizen of this country to prevent the continued circulation of a false representation in the form of a document, in my judgment the law is defective. However, as the argument developed it seemed to me more and more likely that I was going to be forced to the conclusion that no such right did exist. Mr Littman, for the plaintiffs, put his case in this way. He said he did not need to show an accrued cause of action to restrain the use of the documents; all he had to do was to isolate a right which, when other factors were added to it, would constitute a cause of action. He relied on three well known forms of action: the right to restrain passing off, malicious falsehood and defamation. As I understand it, he did not claim that he had an accrued cause of action for any of those wrongs; and, indeed, in my judgment he plainly has not. The requisite constituent elements of a claim in passing off are, first, that there has to be misrepresentation; second, that it is made by a trader in the course of trade; third, to a prospective customer of his, or to consumers of goods or services supplied by him; fourth, which is calculated to injure the business or goodwill of another trader; and, fifth, which causes actual damage to the business or goodwill of the trader by whom the action is brought. It would be stretching concepts of trade and business in this case well beyond anything that has previously occurred to suggest either that the Spanish Government are traders or that OAI is a trader in business. As to malicious falsehood, there has to be not only an untrue statement but that untrue statement must be made maliciously and said without any belief in its truth. The evidence here certainly does not suggest that that is the current position. Finally, in relation to defamation, in addition to any untrue statement there has to be at least damage to the reputation of the plaintiff. At the moment I can see no way in which it can be said that the continued circulation of forged documents would be defamatory to the Spanish Government. However, Mr Littman submits that that is not the question. He says that the underlying right in each of those forms of action is the basic right of a citizen not to have untruths told about himself. Having identified that as the right, he says that the other elements necessary to bring an action successfully are mere appendages or conditions attached to the possession of a cause of action rather than being a basic legal right protected. Therefore, says Mr Littman, he is entitled in this case to a declaration of the falsity of the documents, there being a general right to restrain the circulation of untrue statements. He has shown a basic right and therefore is entitled to a declaration to the effect that the documents are untrue. I was unpersuaded by that analysis. In 211
Sourcebook on Obligations and Remedies the pragmatic way in which English law has developed, a man’s legal rights are in fact those which are protected by a cause of action. It is not in accordance, as I understand it, with the principles of English law to analyse rights as being something separate from the remedy given to the individual. Of course, in quia timet proceedings you do not have, for example, to show that damage has occurred even if damage is a necessary constituent of the cause of action. It is enough to show that the defendant has an intention to do an act which, if done, will cause damage. But in my judgment, in the ordinary case to establish a legal or equitable right you have to show that all the necessary elements of the cause of action are either present or threatened. I am fortified in that view by submissions made by Mr Scott for OAI that if there were any such general right as Mr Littman contends for, it is impossible to see why the specific constituent elements of passing off or malicious falsehood have ever developed. If every man can protect the false use of his name or reputation by having a basic right so to do, why is it that the courts have developed the very limited class of cases in which an action for passing off or malicious falsehood can be brought? Therefore, I was very far from satisfied that Mr Littman had shown that the plaintiffs had any legal or equitable right as against the defendants that they were entitled to enforce by way of declaration. The case is just not one in which the defendants have done or are threatening to do acts which constitute defamation, malicious falsehood or passing off. However, the case took a new turn when a number of cases were cited, one of which at least was directly in point. Emperor of Austria v Day (1861) 3 De GF & J 217 is a decision of the Court of Appeal in Chancery… I find it very difficult to discover what was the cause of action of the Emperor of Austria in that case. The judgments make it clear that the court was not enforcing the prerogative rights of the Emperor as sovereign of Hungary. The essential ingredient concentrated on by the court was that the acts of the defendant in printing the notes were a threat to do some act which would injure the property or cause pecuniary damage to the Emperor and to his subjects. So far as I can see, the court proceeded on the basis that if the acts of the defendant did threaten such damage, it was self-evident that there was a threat of an equitable wrong which should be restrained by injunction: see per Lord Campbell LC, pp 233, 240, and Knight Bruce LJ, p 245. The proposition being put forward by the Court of Appeal in that case appears to be that a deliberate act of the defendant which will cause injury to the plaintiffs property or pecuniary damage to him will be restrained by injunction in the Courts of Equity… Is such damage possible in this case? It is certainly not currently alleged in the originating summons as such. However, in my judgment it is certainly arguable in the present case that the continued use of forged documents of the Spanish State, purporting to show the lawful export of works of art from Spain, is directly comparable to the false currency which was under consideration in the Emperor of Austria case. The issue of false currency could debase the lawful currency of Hungary; the use of forged documents of the Government of Spain could debase the credibility of genuine export documents issued by that government. The question in this case will be
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Remedies whether such debasement would cause damage to the property of the Kingdom of Spain or the property of its subjects. It is plain that in the Emperor of Austria case ‘property’ in relation to a claim by a foreign sovereign was used in rather a loose sense: see RCA Corporation v Pollard [1983] Ch 135, p 153, per Oliver LJ. Mr Littman suggested that such damage flowing from the continued use of forged documents is in this case to be found in the diminution in the value of pictures still in Spain for which genuine export licences could be obtained in the future and the fact that, if illicitly exported pictures can continue to be sold with forged documents, the expense to the Kingdom of Spain of buying them back for the benefit of Spain will be pro tanto increased. To that I would add that possibly the ability to continue to use forged documents after illicit export is a factor calculated to increase the attractions of illicit export to wrongdoers, thereby depriving the inhabitants of Spain of public works of art owned by the Kingdom of Spain and injury to the property in Spain. Whether those arguments are well founded or not is not for me to determine finally on this application. The Emperor of Austria case (1861) 3 De GF & J 217 has satisfied me that there may be—and I say no more than that—a legal right in this case which the plaintiffs are entitled to have declared by way of declaration in the way sought. It is not plain and obvious that the action cannot succeed. I turn then to consider the second ground on which the defendants seek to strike out this claim, namely, that the claim is an abuse of the process of the court. It is submitted on behalf of the defendants that the purpose of these proceedings is to denigrate the value of the picture at the forthcoming sale by a collateral attack so as to secure the eventual return of the picture to Spain at a cheaper price. They point to what they say is delay in the bringing of proceedings; that although the Government of Spain had known of the illegal export since 1983, and indeed have known that OAI were the owners since then, they have not thought fit to bring proceedings until just before the forthcoming sale. The defendants say that there is no way in which this action can be determined before the sale on 11 April, and the intention is to have it as a blight cast on the sale. They point to the statements made in the Spanish press to the effect that the government are going to do everything they can to stop the sale. They point also to the fact that the Spanish Government have not sought to proceed by way of an application for an injunction which would require them to give a cross-undertaking in damages, but have satisfied themselves with this unusual procedure of a simple declaration as to truth and falsity. In the light of all those circumstances, it is said that the court is being used by the Spanish Government for a collateral purpose and not bona fide for the purpose for which the right of action, if any, exists. I agree with the defendants that if they could make out that case it would be a case for striking out. But I am not myself satisfied that the Spanish Government are motivated either exclusively or primarily by the collateral motive suggested. First, as to delay, I can see no grounds for criticising the 213
Sourcebook on Obligations and Remedies Spanish Government in not having taken proceedings. For purposes which are no doubt good ones, the defendants OAI are a cosmopolitan body of people spread over many jurisdictions: Liberia, British Virgin Islands, Channel Islands and Paris. There is no obvious jurisdiction in which those people could be sued. What is more, the whereabouts of the picture have been unknown since it was with the Getty Museum. There was no cause for proceedings when the picture was with the Getty Museum because that museum declined to go on in any event. I ask rhetorically: where could these proceedings have been brought, unless and until the Spanish Government knew that the picture was to be in this country and that there was to be a sale of it? I can see no ground for criticism of the Spanish Government on that head. Secondly, as to the chances of the matter being tried before 11 April, although I have not yet decided or indeed heard full argument I am bound to say that my present impression coincides with that of the defendants, namely, that there is really no hope of this matter being tried before 11 April on the merits. The Spanish Government are advised by very reputable and skilled solicitors and counsel, and I am told that the legal advisers took the view that the case could be determined before 11 April, and it was for that purpose that the claim for relief was limited to a declaration. I am satisfied that that was a view genuinely, if possibly mistakenly, held. In my judgment the Spanish Government have here, if I am right on there being a possible cause of action, a legitimate interest which they are seeking to defend in this action, namely, in preventing the continued use of forged documents of the Spanish State. As to the failure to apply for an interim injunction, it is not a necessity that a party threatened with an injury is forced to apply for interlocutory relief. If they choose not to do so, that is for them to decide. The Spanish Government say that they will continue with this action, even if the sale does take place on 11 April and is not postponed. It is suggested that that is in some way indicative also of an abuse. I cannot see it that way. Proceedings now having started in a jurisdiction in which OAI has consented to be joined, it seems to me no hardship for the action to continue (if it is to go on) until judgment, even if the defendants choose not to postpone the sale. It may well be that the Spanish Government will receive a collateral advantage by pursuing this action in the form of a diminution in the price of the picture. They have said that they are not intending to bid at the sale, but there is no suggestion that they are no longer interested in buying under any circumstances. But I am not satisfied that their sole or predominant objective in this case is to force down the price. It appears to be a much wider concern, namely, the concern not to permit false documents to continue to circulate in support of a picture which they say has been illicitly exported. Often in litigation parties hope to use the litigation as a weapon to achieve wider results. In my judgment, in such cases the action cannot be struck out as an abuse of the process until it is shown that that is their predominant objective as opposed to a collateral benefit. I therefore refuse also to strike out the whole summons as an abuse of the process of the court.
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Remedies Finally, in fairness to the defendants I should emphasise two points, because it is important that the existence of these proceedings should not be either misconstrued or misunderstood. The action does not in any way impugn the title of OAI to sell the picture. The title to the picture of any buyer will not be affected by anything which eventually happens in this action. The action only relates to the question whether the picture was or was not lawfully exported from Spain. Secondly, I must emphasise that for the purposes of this judgment I have had to assume that the allegations as to forgery as made by the Government of Spain are correct. This judgment in no way constitutes a finding or any indication that those allegations have been proved.
Notes and questions 1
2
3 4
‘Ubi jus ibi remedium: where there’s a right there’s a remedy. To this, the realist replies—ubi remedium ibi jus: where there’s a remedy there’s a right’ (Lawson, Remedies of English Law, 2nd edn, 1980, Butterworths, p 1). Does Spain v Christie support this realist view? The effectiveness of the system of English civil justice may be attributed to the vast number, variety, diversity and flexibility of its judicial remedies. The remedies depend on the nature of the legal rights, claims and interests established, and as these may themselves vary considerably, so the corresponding remedies will vary also, which is why civil remedies are by their nature so multifarious and multi-varied… [T]he categories of civil remedies are not closed, and the judicial machinery…may devise and operate new remedies, or variations of old remedies…’ (Jacob, The Fabric of English Civil Justice, 1987, Stevens, pp 171–72). To what extent can the courts themselves devise new remedies as opposed to thinking up new variations of old remedies? Do they have the power actually to devise new remedies? (Cf Lawton LJ, below.) What substantive rights are in issue in the Spain case? Are rights and causes of action synonymous? Can one ever have a right without a cause of action? Can one ever have a cause of action without a right? (Cf Jackson v Horizon Holidays, below, p 220.) R v West Sussex Quarter Sessions [1973] 3 All ER 289 Court of Appeal Lawton LJ:… If this court had jurisdiction to change the law so that justice could be done more easily and effectively, there are many new remedies which could be introduced; but we have no such jurisdiction. We must administer the law as we find it. Part of that law is the common law: that part has a history which has formed it. Once a remedy developed by the common law has taken a certain form and its limitations have been defined, in my opinion the judges should accept that form and use the remedy within its limitations. They can cast off any medieval or procedural shackles which may restrict the use of a remedy; they should not seek to change its nature…
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Sourcebook on Obligations and Remedies Esso Petroleum Co Ltd v Southport Corporation [1953] 3 WLR 773 Queen’s Bench Division; [1954] 2 QB 182 Court of Appeal; [1956] AC 218 House of Lords This was an action for damages brought by Southport Corporation against an oil company whose tanker had run aground and whose cargo of oil, when deliberately released from the stricken ship by the captain in order to avoid loss of life, had polluted the corporation’s beaches. The corporation pleaded as causes of action trespass, nuisance (private and public) and negligence of the captain; they subsequently, at the appeal stage, attempted to plead a further cause of action, namely that the company itself was negligent in putting to sea an unseaworthy ship. The trial judge held that the captain had not been negligent and dismissed the damages action; the Court of Appeal allowed an appeal on the ground that it was for the defendants to disprove any negligence; the House of Lords restored the trial judge’s decision. Devlin J (Queen’s Bench Division):… If there is an unlawful interference with the plaintiff’s property, the question whether it is a trespass or a nuisance depends upon whether or not it is a direct physical interference. I incline to the view that in this case it is; but having regard to the views which I have expressed about nuisance I think it is unnecessary to enter into this matter, which is not covered exactly by precedent. It may well be that it is one of those cases which are described in the books as a nuisance of a particular kind analogous to trespass… In my judgment the plaintiffs have a good cause of action in trespass or nuisance subject to the special defences raised by the defendants which I shall next consider. On the first of these, if one seeks an analogy from traffic on land, it is well established that persons whose property adjoins the highway cannot complain of damage done by persons using the highway unless it is done negligently… These cases amplify the principle in Holmes v Mather which dealt with collisions on the highway itself and which is the foundation of the modern practice whereby a plaintiff in a running-down action sues for negligence and not for trespass… Denning LJ (Court of Appeal): This is one of those cases, rare nowadays, where much depends on ascertaining the proper cause of action, particularly with regard to the burden of proof… The judge seems to have thought that it did not matter much what was the proper cause of action; it all came back in the end to the universal tort of negligence… I do not share this view… (1) Trespass to land… I am clearly of opinion that the Southport Corporation cannot here sue in trespass. This discharge of oil was not done directly on to their foreshore, but outside in the estuary. It was carried by the tide on to their land, but that was only consequential, not direct. Trespass, therefore, does not lie. (2) Private nuisance. In order to support an action on the case for a private nuisance the defendant must have used his own land or some other land in such a way as injuriously to affect the enjoyment of the plaintiffs’ 216
Remedies land. ‘The ground of responsibility’, said Lord Wright in Sedleigh-Denfield v O’Callaghan, ‘is the possession and control of the land from which the nuisance proceeds’. Applying this principle, it is clear that the discharge of oil was not a private nuisance, because it did not involve the use by the defendants of any land, but only of a ship at sea. (3) Public nuisance. The term ‘public nuisance’ covers a multitude of sins, great and small… Suffice it to say that the discharge of a noxious substance in such a way as to be likely to affect the comfort and safety of Her Majesty’s subjects generally is a public nuisance… Applying the old cases to modern instances, it is, in my opinion, a public nuisance to discharge oil into the sea in such circumstances that it is likely to be carried on to the shores and beaches of our land to the prejudice and discomfort of Her Majesty’s subjects. It is an offence punishable by the common law. Furthermore, if any person should suffer greater damage or inconvenience from the oil than the generality of the public, he can have an action to recover damages on that account, provided, of course, that he can discover the offender who discharged the oil. This action would have been described in the old days as an action on the case, but it is now simply an action for a nuisance… (4) Burden of proof. One of the principal differences between an action for a public nuisance and an action for negligence is the burden of proof. In an action for a public nuisance, once the nuisance is proved and the defendant is shown to have caused it, then the legal burden is shifted on to the defendant to justify or excuse himself. If he fails to do so, he is held liable, whereas in an action for negligence the legal burden in most cases remains throughout on the plaintiff. In negligence, the plaintiff may gain much help from provisional presumptions like the doctrine of res ipsa loquitur, but, nevertheless, at the end of the case the judge must ask himself whether the legal burden is discharged. If the matter is left evenly in the balance, the plaintiff fails. But in public nuisance, as in trespass, the legal burden shifts to the defendant, and it is not sufficient for him to leave the matter in doubt. He must plead and prove a sufficient justification or excuse. (5) Justification or excuse. The defendants seek to justify themselves by saying that it was necessary for them to discharge the oil because their ship was in danger. She had been driven by rough seas on to the revetment wall, and it was necessary to discharge the oil in order to get her off. If she had not done so, lives might have been lost. This is, no doubt, true at that stage in the story, but the question is, how came she to get upon the wall? If it was her own fault, then her justification fails, because no one can avail himself of a necessity produced by his own default. Where does the legal burden rest in this respect? Must the Southport Corporation prove that the ship was at fault in getting on to the wall, or must the ship prove that she herself was not at fault? In my opinion the burden is on the ship. She does not justify herself in law by necessity alone, but only by unavoidable necessity, and the burden is on her to show it was unavoidable.
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Sourcebook on Obligations and Remedies Public nuisance is, in this respect, like unto a trespass, as to which it was said by the Court of King’s Bench as long ago as 1616 in Weaver v Ward, that no man shall be excused ‘except it may be judged utterly without his fault’… Those were, it is true, cases in trespass; but the same principle applies to cases of public nuisance. That is shown by Tarry v Ashton, where a lamp which projected over the Strand fell on to a passer-by. This was described by Lord Wright as private action for a public nuisance: see Sedleigh-Denfield v O’Callaghan. Another example is Wringe v Cohen, where the gable of a house next the highway was blown down in a storm (which was treated by this court as a public nuisance). In both cases the defendant was held liable because his premises were in a defective state. He did not know of the defect, and he was not negligent in not knowing, but, nevertheless, he was liable because he did not prove any sufficient justification or excuse. He did not prove inevitable accident… Lord Radcliffe (House of Lords): My Lords, I think that this case ought to be decided in accordance with the pleadings. If it is, I am of opinion, as was the trial judge, that the respondents failed to establish any claim to relief that was valid in law. If it is not, we might do better justice to the respondents— I cannot tell, since the evidence is incomplete—but I am certain that we should do worse justice to the appellants, since in my view they were entitled to conduct the case and confine their evidence in reliance upon the further and better particulars of the statement of claim which had been delivered by the respondents. It seems to me that it is the purpose of such particulars that they should help to define the issues and to indicate to the party who asks for them how much of the range of his possible evidence will be relevant and how much irrelevant to those issues. Proper use of them shortens the hearing and reduces costs. But if an appellate court is to treat reliance upon them as pedantry or mere formalism, I do not see what part they have to play in our trial system…
Notes and questions 1 2
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Did Denning LJ have a different image of the facts than either Devlin J or Lord Radcliffe? The expressions “private law” and “public law” have recently been imported into the law of England from countries which, unlike our own, have separate systems concerning public law and private law. No doubt, they are convenient expressions for descriptive purposes. In this country they must be used with caution, for, typically, English law fastens not on principles but on remedies. The principle remains intact that public authorities and public servants are, unless clearly exempted, answerable in the ordinary courts for wrongs done to individuals’ (Lord Wilberforce in Davy v Spelthorne BC [1984] AC 262, p 276). Is Esso a public or a private law case? Maitland said that the forms of action continue to rule from the grave. Do you agree? Did the plaintiffs lose in the House of Lords because they did not plead the right cause (form?) of action? 218
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What kind of damage did Southport Corporation suffer: physical damage or economic loss? Read Benjamin v Storr (1874) LR 9 CP 400 in the law report. Why did Devlin J not draw an analogy with this case rather than with the traffic accident cases? Did Esso have control of the tanker? Under what circumstances should control, of itself, give rise to liability on the part of the person in control when the thing controlled does damage? Should something more than control itself be required before one can attribute liability? (Cf Chapter 7.) Do Esso and Cambridge Water (see p 665), when taken together, reject, as a matter of common law, the principle that it is the polluter who should pay? Mercedes Benz AG v Leiduck [1996] 1 AC 284 Privy Council This was an appeal to the Privy Council in respect of an action, brought in the Hong Kong courts, for a Mareva injunction to freeze the assets of two defendants who had allegedly misappropriated the claimant’s money. One defendant succeeded in Hong Kong in getting the injunction set aside on the ground that the injunction claim was not associated with any action for substantive relief in Hong Kong. A majority of the Privy Council dismissed an appeal. Lord Nicholls (dissenting):… The substantive relief sought by a writ or other originating process needs to be founded on a cause of action… Two preliminary points are to be noted. First, practising lawyers tend to think in terms of established categories of causes of action, such as those in contract or tort or trust or arising under statute. They do not always appreciate that the range of causes of action already extends very widely, into areas where identification of the underlying ‘right’ may be elusive. For instance, a writ may properly be issued containing nothing materially more than a claim for an injunction to restrain a defendant from continuing proceedings abroad on the ground that this would be unconscionable: see British Airways Board v Laker Airways Ltd [1985] AC 58, pp 81, 95; [1984] QB 142, p 147. In such a case, the underlying right, if sought to be identified, can only be defined along the lines that a party has a right not to be sued abroad when that would be unconscionable. This formulation exemplifies the circular nature of the discussion. Second, originating process is not always concerned with the determination of an underlying dispute between the parties. For instance, a plaintiff may bring an action for discovery against a person, in respect of whom he has otherwise no cause of action, in aid of other proceedings not yet commenced: see Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133. In such a case the only relief sought is of an interim character in the sense that it is in aid of other proceedings. A right to obtain an interlocutory injunction in aid of the substantive relief sought in an action is not normally regarded as a cause of action. This is because ordinarily proceedings bring a substantive dispute before the court. Attention is therefore focused on the cause of action involved in the substantive dispute the court is being asked to resolve. The claim to interim
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Questions 1
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Is it really possible to talk of rights underlying causes of action in English law? What were the rights of the claimant, if any, in Esso v Southport Corpn? Are not rights defined only in respect of the existence or non-existence of a cause of action? Can equitable remedies create new rights?
3 REMEDIES AND INTERESTS Jackson v Horizon Holidays Ltd [1975] 1WLR 1468 Court of Appeal This was an action for damages brought by a father against a tour operator in respect of a holiday booked by the father for himself and his family. The father had booked the holiday in reliance upon statements made over the telephone and in the tour operator’s brochure. Many of the promised facilities were not available and the hotel and food were of poor quality. The father sought compensation for mental distress in respect of himself, his wife and his children and the trial judge, who thought that they had had half a holiday, awarded half the total price of the holiday, plus another £500 for mental distress. An appeal by the defendants as to the amount awarded was dismissed by the Court of Appeal. Lord Denning MR:… The judge said that he could only consider the mental distress to Mr Jackson himself, and that he could not consider the distress to his wife and children. He said: The damages are the plaintiff’s… I can consider the effect upon his mind of the wife’s discomfort, vexation, and the like, although I cannot award a sum which represents her own vexation. Mr Davies, for Mr Jackson, disputes that proposition. He submits that damages can be given not only for the leader of the party—in this case, Mr Jackson’s own distress, discomfort and vexation—but also for that of the rest of the party. We have had an interesting discussion as to the legal position when one person makes a contract for the benefit of a party. In this case it was a husband making a contract for the benefit of himself, his wife and children. Other cases readily come to mind. A host makes a contract with a restaurant for a dinner for himself and his friends. The vicar makes a contract for a coach trip for the choir. In all these cases there is only one person who makes the contract. It is the husband, the host or the vicar, as the case may be. Sometimes he pays the whole price himself. Occasionally he may get a contribution from the others.
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Remedies But in any case it is he who makes the contract. It would be a fiction to say that the contract was made by all the family, or all the guests, or all the choir and that he was only an agent for them. Take this very case, it would be absurd to say that the twins of three years old were parties to the contract or that the father was making the contract on their behalf as if they were principals. It would equally be a mistake to say that in any of these instances there was a trust. The transaction bears no resemblance to a trust. There was no trust fund and no trust property. No, the real truth is that in each instance, the father, the host or the vicar, was making a contract himself for the benefit of the whole party. In short, a contract by one for the benefit of third persons. What is the position when such a contract is broken? At present the law says that the only one who can sue is the one who made the contract. None of the rest of the party can sue, even though the contract was made for their benefit. But when that one does sue, what damages can he recover? Is he limited to his own loss? Or can he recover for the others? Suppose the holiday firm puts the family into a hotel which is only half built and the visitors have to sleep on the floor? Or suppose the restaurant is fully booked and the guests have to go away, hungry and angry, having spent so much on fares to get there? Or suppose the coach leaves the choir stranded halfway and they have to hire cars to get home? None of them individually can sue. Only the father, the host or the vicar can sue. He can, of course, recover his own damages. But can he not recover for the others? I think he can. The case comes within the principle stated by Lush LJ in Lloyd’s v Hcmper. I consider it to be an established rule of law that where a contract is made with A for the benefit of B, A. can sue on the contract for the benefit of B, and recover all that B could have recovered if the contract had been made with B himself. It has been suggested that Lush LJ was thinking of a contract in which A was trustee for B. But I do not think so. He was a common lawyer speaking of common law. His words were quoted with considerable approval by Lord Pearce in Beswick v Beswick. I have myself often quoted them. I think they should be accepted as correct, at any rate so long as the law forbids the third persons themselves from suing for damages. It is the only way in which a just result can be achieved. Take the instance I have put. The guests ought to recover from the restaurant their wasted fares. The choir ought to recover the cost of hiring the taxis home. Then is no one to recover from them except the one who made the contract for their benefit? He should be able to recover the expense to which he has been put, and pay it over to them. Once recovered, it will be money had and received to their use. (They might even, if desired, be joined as plaintiffs.) If he can recover for the expense, he should also be able to recover for the discomfort, vexation and upset which the whole party have suffered by reason of the breach of contract, recompensing them accordingly out of what he recovers. Applying the principles to this case, I think that the figure of £1,100 was about right. It would, I think, have been excessive if it had been awarded only for the damage suffered by Mr Jackson himself. But when extended to his wife and children, I do not think it is excessive. People look forward to a 221
Sourcebook on Obligations and Remedies holiday. They expect the promises to be fulfilled. When it fails, they are greatly disappointed and upset. It is difficult to assess in terms of money; but it is the task of the judges to do the best they can. I see no reason to interfere with the total award of £1,100.1 would therefore dismiss the appeal.
Notes and questions 1
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The legal action is open to anyone who has a legitimate interest in the success or failure of the claim’ (NCPC, Art 31). Is this true of English law? ‘Take…a landowner who collects pestilential rubbish near a village... The householders nearest to it suffer the most, but everyone in the neighbourhood suffers too. In such cases, the Attorney General can take proceedings for an injunction to restrain the nuisance: and when he does so he acts in defence of the public right, not for any sectional interest… But when the nuisance is so concentrated that only two or three property owners are affected by it…then they ought to take proceedings on their own account to stop it and not expect the community to do it for them…’ (Denning LJ in AG v PYA Quarries [19571 2 QB 169, p 191). How does one distinguish between ‘sectional interest’ and ‘public right’? The notion of an interest can apply to the institutional relationship either between a party and a remedy (see, for example, Besivick v Beswick, p 163) or between a party and the kind of harm they suffer (see, for example, Surrey CC v Bredero Homes, p 295). How easy is it for an English lawyer to move from an ‘interest’ to a ‘right’? Are there any intermediate terms that help facilitate the movement? If the father refused to hand over to his wife the damages he had obtained on her behalf, could the wife bring an action in debt against him to recover them? Could the wife and children have sued in their own right, in tort, Horizon Holidays for damages? Would it make sense to allow a family to contract, to own property and to sue as a legal subject (persona) in itself? Does the family exist as a social reality? Does it have its own interests that the law should recognise?
4 SELF-HELP (a) Personal justice Bradford Corporation v Pickles [1895] AC 587 House of Lords This was an action for an injunction brought by a local authority against a landowner who, so it was alleged, was deliberately interfering with the natural supply of water to the corporation’s waterworks by digging holes on his 222
Remedies land. The landowner, it seemed, was trying to bring pressure on the corporation to purchase his land. The House of Lords gave judgment for the landowner. Lord Halsbury LC:… The acts done, or sought to be done, by the defendant were all done upon his own land, and the interference whatever it is, with the flow of water is an interference with water, which is underground and not shown to be water flowing in any defined stream, but is percolating water, which, but for such interference, would undoubtedly reach the plaintiffs works, and in that sense does deprive them of the water which they would otherwise get. But although it does deprive them of water which they would otherwise get, it is necessary for the plaintiffs to establish that they have a right to the flow of water, and that the defendant has no right to do what he is doing… The very question was…determined by this House [in Chasemore v Richards], and it was held that the landowner had a right to do what he had done whatever his object or purpose might be, and although the purpose might be wholly unconnected with the enjoyment of his own estate… The only remaining point is the question of fact alleged by the plaintiffs, that the acts done by the defendant are done, not with any view which deals with the use of his own land or the percolating water through it, but is done, in the language of the pleader, ‘maliciously’… This is not a case in which the state of mind of the person doing the act can affect the right to do it. If it was a lawful act, however ill the motive might be, he had a right to do it. If it was an unlawful act, however good his motive might be, he would have no right to do it… Lord Macnaghten:… But the real answer to the claim of the corporation is that in such a case motives are immaterial. It is the act, not the motive for the act, that must be regarded. If the act, apart from motive, gives rise merely to damage without legal injury, the motive, however reprehensible it may be, will not supply that element…
Notes and questions 1
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‘Self-redress is a summary remedy, which is justified only in clear and simple cases, or in an emergency’ (Lloyd LJ in Burton v Winters [1993] 1 WLR 1077, p 1082). Was the defendant in Bradford actually exercising a self-help remedy? Does Bradford mean that English law has no doctrine of abuse of rights? (Cf below, p 774.) If the parties had been reversed—that is to say, if it had been the corporation that was digging the holes—would Mr Pickles have had a remedy? The defendant builds a wall that intrudes by a couple of inches into the plaintiff’s land. The claimant is refused an injunction against the defendant. Is the claimant entitled to knock the wall down himself? (Cf Burton v Winters, above.) 223
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5
If the corporation had made a contract to purchase Mr Pickles’ land as a result of his digging the holes, could the contract have been set aside in equity on the basis of duress?
(b) Self-protection R v Self [1992] 1 WLR 657 Court of Appeal Garland J:… This matter comes before the court by leave of the single judge on a point of law. There is one point central to the appeal. It is this. Since the appellant was acquitted of theft neither Mr Frost nor Mr Mole were entitled by virtue of s 24 of the Police and Criminal Evidence Act 1984 to effect a citizen’s arrest. If they were not entitled to do that then this appellant could not be convicted of an assault with intent to resist or prevent the lawful apprehension or detainer of himself, that is to say his arrest… The view of this court is that little profit can be had from taking examples and trying to reduce them to absurdity. The words of the statute are clear and applying those words to this case there was no arrestable offence committed. It necessarily follows that the two offences under s 38 of the Offences Against the Person Act 1861 could not be committed because there was no power to apprehend or detain the appellant. It follows also, that that being the law, as this court sees it, the convictions on counts 2 and 3 must be quashed and this appeal allowed.
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A person is entitled to use reasonable force to resist a trespass: thus selfhelp can be used in cases of assault, false imprisonment and trespass to land and goods. But what are the limits? What if a trespasser gains actual possession of the land or goods of another: can the owner use force to recover the land or goods? If not, why not? D, without any justification whatsoever, attacks C on a public highway and C, in order to protect himself, throws a large brick at D. The brick misses D and hits P, an innocent passer-by. Can P sue C or D for trespass? A bolt of lightning starts a fire on D’s land. P, worried by the fire and the fact that D is making no effort to put it out, enters D’s land and puts the fire out himself. If D assaults P while on the land, could P sue D for trespass? Revill v Newbery [1996] QB 567 Court of Appeal This was an action for damages by a burglar injured when shot by the owner of a shed into which he was trying illegally to enter. The Court of Appeal upheld an award of damages suitably reduced for contributory negligence. Neill LJ:… Each case must depend on its own facts. There may well be cases where in order to frighten a burglar away a gun is discharged in the air and 224
Remedies the burglar is injured because unexpectedly he is on the roof. That, however, is not this case. I have carefully considered what weight should be given to the fact that the defendant thought that the intruder was at the window rather than at the door. I have come to the conclusion, however, that the judge was entitled to treat the discharge of the gun not merely as a warning shot but as a shot which was likely to strike anyone who was in the vicinity of the door. Although the intruder may have been at the window a person in the defendant’s position could reasonably have anticipated that if the window were shuttered, as it was, the intruder might move to the door. The hole through which the gun was discharged was at body height and, as I understand it, the gun was fired more or less horizontally. It is right to emphasise, as did the judge, that the defendant certainly did not intend to hit the plaintiff. Nevertheless, I am satisfied that on the facts of this case the judge was entitled to find that the plaintiff was a person to whom the defendant owed some duty and that the defendant was in breach of that duty. The finding of a substantial proportion of contributory negligence was more than justified. I would dismiss the appeal. Millett LJ: For centuries the common law has permitted reasonable force to be used in defence of the person or property. Violence may be returned with necessary violence. But the force used must not exceed the limits of what is reasonable in the circumstances. Changes in society and in social perceptions have meant that what might have been considered reasonable at one time would no longer be so regarded; but the principle remains the same. The assailant or intruder may be met with reasonable force but no more; the use of excessive violence against him is an actionable wrong. It follows, in my opinion, that there is no place for the doctrine ex turpi causa non oritur actio in this context. If the doctrine applied, any claim by the assailant or trespasser would be barred no matter how excessive or unreasonable the force used against him. I agree that, for the reasons given by Neill LJ, the judge was entitled to find that the defendant’s conduct was not reasonable. It was clearly dangerous and bordered on reckless. I would dismiss the appeal.
Questions 1 2
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Is the defendant liable to the claimant in the tort of trespass or negligence? Is this case authority for the proposition that one should never try to defend oneself, one’s family or one’s property against a burglar, for there is always a risk that one will have to pay him or her damages? Why is it not possible to say that a burglar who enters another’s property takes the risk of the householder behaving, perhaps out of fear, irrationally? A householder shoots and kills a professional burglar. The wife of the burglar sues the householder for damages under the Fatal Accidents Act 1976. Can she claim compensation for the ‘earnings’ that her late husband
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would have made from his ‘professional’ activity had he not been wrongfully killed?
(c) Refusal to pay Principles of European Contract Law Article 9.201 Right to withhold performance (1) A party who is to perform simultaneously with or after the other party may withhold performance until the other has tendered performance or has performed. The first party may withhold the whole of its performance or a part of it as may be reasonable in the circumstances. (2) A party may similarly withhold performance for as long as it is clear that there will be a non-performance by the other party when the other party’s performance becomes due. Vigers v Cook [1919] 2 KB 475 Court of Appeal (See p 516.) Bolton v Mahadeva [1972] 1 WLR 1009 Court of Appeal This was a debt action for £560 brought by a firm of heating engineers against a householder who had contracted with the engineers to have a central heating system installed in his house for £560. The householder claimed that the work of installation was so defective that it amounted to a non-performance of the contract and that, accordingly, he was not liable to pay anything. The trial judge held that the system was defective and would cost £174.50 to remedy; he gave judgment for £385.50 plus another £46 for extras. The Court of Appeal allowed an appeal by the householder. Cairns LJ:… The main question in the case is whether the defects in workmanship found by the judge to be such as to cost £174 to repair—that is, between one-third and one-quarter of the contract price—were of such a character and amount that the plaintiff could not be said to have substantially performed his contract. That is, in my view, clearly the legal principle which has to be applied to cases of this kind. The rule which was laid down many years ago in Cutter v Powell in relation to lump sum contracts was that unless the contracting party had performed the whole of his contract, he was not entitled to recover anything. That strong rule must now be read in the light of certain more recent cases… Perhaps the most helpful case is the most recent one of Hoenig v Isaacs. That was a case where the plaintiff was an interior decorator and designer of furniture who had entered into a contract to decorate and furnish the defendant’s flat for a sum of £750; and, as appears from the statement of facts, the official referee who tried the case at first instance found that the door of a wardrobe required replacing, that a bookshelf which was too short would have to be re-made, which would require alterations being made to a bookcase, and that the cost of remedying the defects was £55 18s 2d. That is 226
Remedies on a £750 contract. The ground on which the Court of Appeal in that case held that the plaintiff was entitled to succeed, notwithstanding that there was not complete performance of the contract, was that there was substantial performance of the contract and that the defects in the work which there existed were not sufficient to amount to a substantial degree of nonperformance. In considering whether there was substantial performance I am of opinion that it is relevant to take into account both the nature of the defects and the proportion between the cost of rectifying them and the contract price. It would be wrong to say that the contractor is only entitled to payment if the defects are so trifling as to be covered by the de minimis rule… Now, certainly it appears to me that the nature and amount of the defects in this case were far different from those which the court had to consider in H Dakin and Co Ltd v Lee and Hoenig v Isaacs. For my part, I find it impossible to say that the judge was right in reaching the conclusion that in those circumstances the contract had been substantially performed. The contract was a contract to install a central heating system. If a central heating system when installed is such that it does not heat the house adequately and is such, further, that fumes are given out, so as to make living rooms uncomfortable, and if the putting right of those defects is not something which can be done by some slight amendment of the system, then I think that the contract is not substantially performed. The actual amount of expenditure which the judge assessed as being necessary to cure those particular defects were £40 in each case. Taking those matters into account and the other matters making up the total of £174, I have reached the conclusion that the judge was wrong in saying that this contract had been substantially completed; and, on my view of the law, it follows that the plaintiff was not entitled to recover under that contract…
Notes and questions 1
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One of the most effective remedies that a consumer has against a supplier who provides shoddy goods or services is the option not to pay the bill. In effect the consumer is either (a) simply repudiating the contract for serious breach by the other party (see Chapter 6); or (b) refusing to perform because the other party has not performed. What is the difference between breach of contract and non-performance of a contract? Were the consumers in Vigers and Mahadeva refusing to pay because the other party was in breach? If, of course, the consumer is not justified in repudiating because (a) the breach by the supplier does not go to the root of the contract; or (b) the other party has substantially performed, then the consumer will be in breach of contract. What remedies will the supplier then have against the consumer? If the refusal to pay the bill caused the undertaker or the firm of heating engineers to borrow money at a high rate of interest to stop them going bankrupt, could they claim this interest in an action for damages against the consumer? 227
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In both Vigers and Mahadeva, it could be said that the consumer received something from the supplier. Ought they to pay for this something? If the houseowner in Mahadeva had brought another firm in to get the heating working for a price of £100 (1972 prices), would it be just and equitable that the owner could obtain a heating system so cheaply? Had he unjustly enriched himself at the expense of the first heating firm? What if the firm had been a cowboy firm of builders: can one unjustly enrich oneself at the expense of a cowboy firm of builders? In Mahadeva, the refusal to pay was a particularly effective remedy. But what if the heating engineers had not only installed a bad system, but also had caused extensive damage to the owner’s house? In this situation, the owner would have had to sue for damages for breach of contract and such a remedy covers only the actual loss suffered by the plaintiff. Would the court, then, have set off the cost of the pipes, radiators, etc, against the loss suffered by the owner? What if this case had come before the courts in the days when there were still juries in civil cases and the jury had decided that the heating engineers had substantially performed the contract: could the Court of Appeal have reversed their finding? Eller v Grovecrest Investments Ltd [1994] 4 All ER 845 Court of Appeal Hoffmann LJ: The question in this appeal is whether set off against a claim for rent can be invoked against a landlord exercising the ancient common law remedy of distress… [The] authorities can be understood only against the background of the principles which governed set off at common law and equity before the Judicature Acts. At common law, a defendant could resist a money claim on the ground that he had already paid money to the plaintiffs use… But no cross-claim could be set off in any proceedings until the Insolvent Debtors Relief Act 1729… Nevertheless, set off under the statute was restricted to mutual debts and did not, for example, allow the set off of a claim for unliquidated damages such as the tenant makes in this case… So much for the position at common law. The Court of Chancery approached set off on a wider basis and would relieve a debtor against a common law liability when he had a cross-claim ‘so directly connected with [the claim] that it would be manifestly unjust to the claimant to recover without taking into account the cross-claim’ (see Cia Sud Americana de Vapores v Shipmair BV, The Teno [1977] 2 Lloyd’s Rep 289, p 297, per Parker J). The procedural remedy given by the Court of Chancery was to injunct the plaintiff from bringing or proceeding with his common law action until the cross-claim had been taken into account…
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Remedies What fair dealing requires seems clear enough. It is contrary to principle that a landlord should be able to recover more by distress than he can by action… In my judgment, therefore, this court is free to hold that set off is available against a claim to levy distress. Mr Philip Wood, in his comprehensive book on English and International Set Off, 1989, para 4.86, says that this is the better view. I agree… Neill LJ:… It is necessary to remember that before the passing of the statutes of set off in the time of George II there was no right of set off in an action at law… The introduction of the statutory right of set off represented an important development, but the set off was only available in the circumstances prescribed in the statute, that is, in respect of debts or liquidated demands due between the same parties in the same right. It followed, therefore, that a claim for damages for tort or in pursuit of a remedy in respect of some tortious liability could not be used by way of a set off under the statutes… It would appear that another effect of the strict rules governing a statutory set off at law was that in the 18th and 19th centuries, before the Judicature Acts 1873 and 1875, courts of equity were very reluctant to intervene where the position of the parties inter se was regulated by their rights at law… The position was different, however, where the set off relied on was a true equitable set off and one which was not even arguably within the statutes…
Notes and questions 1
2 3
Two important self-help remedies in commercial law are set off and liens: the first operates within the remedy of debt (see below), while the second is, like the landlord’s remedy of distress, a self-help remedy in rem exercised against the goods of another. Thus, a bailee may in certain circumstances have a lien on the thing bailed. What are the circumstances? Could banking function without set off? What is the relationship, if any, between set off and subrogation? P buys an expensive washing machine using his credit card. The washing machine explodes after the third use and damages clothes and surrounding property. Can P set off the cost of all this against his credit card bill? What if the Conditions of Use in the credit card contract contains a clause denying the right of any credit card holder to use the remedy of set off? (Cf Consumer Credit Act 1974, s 75; Stewart Gill Ltd v Horatio Myer Co Ltd [1992] QB 600.)
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5 DEBT (a) Contractual debt Principles of European Contract Law Article 9.101 Monetary obligations (1) The creditor is entitled to recover money which is due. (2) Where the creditor has not yet performed its obligation and it is clear that the debtor will be unwilling to receive performance, the creditor may nonetheless proceed with its performance and may recover any sum due under the contract unless: (a) it could have made a reasonable substitute transaction without significant effort or expense; or (b) performance would be unreasonable in the circumstances. Article 9.307 Recovery of money paid On termination of the contract a party may recover money paid for a performance which it did not receive or which it properly rejected. Jervis v Harris [1996] Ch 195 Court of Appeal Millett LJ:… The question…is whether the landlord’s right to enter the property, effect the repairs himself and then claim to recover the cost of doing so from the tenant is a claim for damages for breach of a covenant by the tenant ‘to keep or put in repair during the currency of the lease all or any of the property comprised in the lease’… The short answer to the question is that the tenant’s liability to reimburse the landlord for his expenditure on repairs is not a liability in damages for breach of his repairing covenant at all. The landlord’s claim sounds in debt not damages; and it is not a claim to compensation for breach of the tenant’s covenant to repair, but for reimbursement of sums actually spent by the landlord in carrying out repairs himself. I shall expand on each of these distinctions in turn. The law of contract draws a clear distinction between a claim for payment of a debt and a claim for damages for breach of contract. The distinction and its consequences are set out in Chitty on Contracts, 27th edn, 1994, Vol 1, p 1046, para 21–031. As there stated, a debt is a definite sum of money fixed by the agreement of the parties as payable by one party to the other in return for the performance of a specified obligation by the other party or on the occurrence of some specified event or condition; whereas damages may be claimed from a party who has broken his primary contractual obligation in some way other than by failure to pay such a debt. The plaintiff who claims payment of a debt need not prove anything beyond the occurrence of the event or condition on the occurrence of which the debt became due. He need prove no loss; the rules as to remoteness of damage 230
Remedies and mitigation of loss are irrelevant; and unless the event on which the payment is due is a breach of some other contractual obligation owed by the one party to the other the law on penalties does not apply to the agreed sum. It is not necessary that the amount of the debt should be ascertained at the date of the contract; it is sufficient if it is ascertainable when payment is due. The landlord’s monetary claim under clause 2(10) does not arise unless and until he has carried out the repairs; when it does arise, his claim is for an account and payment, not for damages. Moreover, the landlord’s monetary claim under such a clause is not a claim for compensation for loss suffered by him by reason of the tenant’s failure to repair but for reimbursement of expenditure which he incurred in order to avoid such loss. The difference is one of substance. The loss which the landlord suffers by reason of the tenant’s failure to repair is the diminution of the value of his interest in the property. Even before the Landlord and Tenant Act 1927 the landlord could not recover more than the diminution in the value of the reversion unless he coupled his claim with a claim for forfeiture of the lease. Even if the landlord left the lease on foot then, having recovered damages for breach of the tenant’s repairing covenant, he was not bound to apply them in carrying out repairs. He could choose to leave the property unrepaired; he had been fully compensated for the diminution in the value of his interest, and the tenant would have to live with the diminution in the value of his. But a clause such as clause 2(10) works very differently. It enables the landlord to take remedial action himself to avoid any loss consequent on the tenant’s failure to repair. Once the landlord has carried out the repairs himself, the value of his interest in the property is restored. The work of repair enures to the benefit of the tenant as well as the landlord. The landlord is out of pocket, but that is because he has carried out repairs, not because the property is in disrepair… The landlord’s claim to reimbursement is not triggered by the tenant’s breach of covenant but by his own expenditure on carrying out repairs. The fact that the property is in disrepair is not enough. The landlord must have carried out work to remedy the want of repair; and his right to do so does not depend upon the existence of any covenant on the part of the tenant, but simply upon there being a want of repair which the tenant has failed to remedy within the stated period after notice. The fact that the tenant is thereby in breach of covenant is neither here nor there. It merely means that the landlord has an alternative remedy of claiming damages for breach of covenant. But the presence of an alternative remedy which the landlord does not choose to enforce cannot affect the proper characterisation of the remedy which he does… White & Carter (Councils) Ltd v McGregor [1962] AC 413 House of Lords (Scotland) Lord Reid: My Lords, the pursuers supply to local authorities litter bins which are placed in the streets. They are allowed to attach to these receptacles plates carrying advertisements, and they make their profit from payments made to them by the advertisers. The defender carried on a garage in Clydebank and in 1954 he made an agreement with the pursuers under which they displayed 231
Sourcebook on Obligations and Remedies advertisements of his business on a number of these bins. In June 1957 his sales manager made a further contract with the pursuers for the display of these advertisements for a further period of three years. The sales manager had been given no specific authority to make this contract and when the defender heard of it later on the same day he at once wrote to the pursuers to cancel the contract. The pursuers refused to accept this cancellation. They prepared the necessary plates for attachment to the bins and exhibited.them on the bins from 2 November 1957 onwards. The defender refused to pay any sums due under the contract and the pursuers raised the present action in the Sheriff Court craving payment of £196 4s the full sum due under the contract for the period of three years. After sundry procedure the Sheriff Substitute on 15 March 1960 dismissed the action… The case for the defender (now the respondent) is that, as he repudiated the contract before anything had been done under it, the appellants were not entitled to go on and carry out the contract and sue for the contract price: he maintains that in the circumstances the appellants’ only remedy was damages, and that, as they do not sue for damages, this action was rightly dismissed… The general rule cannot be in doubt. It was settled in Scotland at least as early as 1848 and it has been authoritatively stated time and again in both Scotland and England. If one party to a contract repudiates it in the sense of making it clear to the other party that he refuses or will refuse to carry out his part of the contract; the other party, the innocent party, has an option. He may accept that repudiation and sue for damages for breach of contract, whether or not the time for performance has come; or he may if he chooses disregard or refuse to accept it and then the contract remains in full effect… I need not refer to the numerous authorities. They are not disputed by the respondent but he points out that in all of them the party who refused to accept the repudiation had no active duties under the contract. The innocent party’s option is generally said to be to wait until the date of performance and then to claim damages estimated as at that date. There is no case in which it is said that he may, in face of the repudiation, go on and incur useless expense in performing the contract and then claim the contract price. The option, it is argued, is merely as to the date as at which damages are to be assessed… Of course, if it had been necessary for the defender to do or accept anything before the contract could be completed by the pursuers, the pursuers could not and the court would not have compelled the defender to act, the contract would not have been completed and the pursuers’ only remedy would have been damages… It might be said that, because in most cases the circumstances are such that an innocent party is unable to complete the contract and earn the contract price without the assent or co-operation of the other party, therefore in cases where he can do so he should not be allowed to do so. I can see no justification for that. [Another] ground would be that there is some general equitable principle or element of public policy which requires this limitation of the contractual rights 232
Remedies of the innocent party. It may well be that, if it can be shown that a person has no legitimate interest, financial or otherwise, in performing the contract rather than claiming damages, he ought not to be allowed to saddle the other party with an additional burden with no benefit to himself. If a party has no interest to enforce a stipulation, he cannot in general enforce it: so it might be said that, if a party has no interest to insist on a particular remedy, he ought not to be allowed to insist on it. And, just as a party is not allowed to enforce a penalty, so he ought not to be allowed to penalise the other party by taking one course when another is equally advantageous to him. If I may revert to the example which I gave of a company engaging an expert to prepare an elaborate report and then repudiating before anything was done, it might be that the company could show that the expert had no substantial or legitimate interest in carrying out the work rather than accepting damages: I would think that the de minimis principle would apply in determining whether his interest was substantial, and that he might have a legitimate interest other than an immediate financial interest. But if the expert had no such interest then that might be regarded as a proper case for the exercise of the general equitable jurisdiction of the court. But that is not this case. Here the respondent did not set out to prove that the appellants had no legitimate interest in completing the contract and claiming the contract price rather than claiming damages; there is nothing in the findings of fact to support such a case, and it seems improbable that any such case could have been proved. It is, in my judgment, impossible to say that the appellants should be deprived of their right to claim the contract price merely because the benefit to them, as against claiming damages and re-letting their advertising space, might be small in comparison with the loss to the respondent: that is the most that could be said in favour of the respondent. Parliament has on many occasions relieved parties from certain kinds of improvident or oppressive contracts, but the common law can only do that in very limited circumstances. Accordingly, I am unable to avoid the conclusion that this appeal must be allowed and the case remitted so that decree can be pronounced as craved in the initial writ. Lord Keith of Avonholm (dissenting):… If I understand aright, counsel for the appellants would read time of performance as time of performance by the defender after the appellants had discharged their part of performance under the contract. Their claim then becomes a claim, not for damages for breach of contract, but for a debt due by the defender under the contract. In other words, there would be an anticipatory repudiation by the defender which the appellants were not bound to accept as a breach of contract and which did not cease to be anticipatory until the moment when the defender was due to make payment under the contract. This, I think, goes beyond anything that has been decided in the cases where anticipatory repudiation has been considered. It makes an arbitrary distinction and one differing in its consequences according as performance is first called for under the contract from the repudiating party, or from the other party. In the former case there is a plain breach of contract making the repudiating party liable in damages, unless where a claim for specific implement is available. In the latter case, according to the submission made, he is liable contractually for a debt at least where the consideration for performance by the other party is expressed in money. The law of Scotland has always stressed the mutuality of contracts and it should follow, in my opinion, that the consequences of
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Sourcebook on Obligations and Remedies breach of contract by either party should correspond. I would state the position in the case of an anticipatory repudiation not accepted by the other party as a breach of contract thus: If the contract is to take operative effect in the first place by performance of the repudiating party and he maintains his repudiation by refusing, or failing to give performance, the other party has a cause of action for either damages or specific implement. If performance is first to be given by the other party and the time for his performance has arrived he must tender performance, in the sense of showing that he is now ready and able to give performance, and if this tender is still rejected by the repudiating party his only cause of action again arises to him as at that date. I would refer first to contracts for the sale of goods which were touched on in the course of the debate, for the reason that one of the remedies provided to the seller by the Sale of Goods Act 1893, is an action for the price. This, however, applies only in two cases. One is where the property in the goods has passed to the buyer. But property cannot pass without the intention of the buyer as well as that of the seller and, except in some such cases as fraud or lack of consensus in idem or breach of contract by the seller, no question of repudiation can arise. The contract is completed and finished apart from delivery and nothing remains but payment of the price. The only other case is where parties have contracted for payment on a day certain, irrespective of delivery or the passing of property. This is a clear case of a contractual debt unconditioned by any question of performance by the other party. A much closer parallel with the present case is a contract to sell future, or unascertained goods. In this case there can be no appropriation of, and therefore passing of, property in the goods without the assent of both buyer and seller. If therefore the buyer repudiates the contract before appropriation, or refuses his assent to appropriation, there can be no passing of property. The seller is then confined to an action of damages for breach of contract. This, of course, is a rule of statute. But the Act is largely declaratory of English law, though not of Scots law. So the rule can only be treated as an analogy, but it is an analogy which seems to me to make a hole in the principle contended for by the appellants… I find the argument advanced for the appellants a somewhat startling one. If it is right it would seem that a man who has contracted to go to Hong Kong at his own expense and make a report, in return for remuneration of £10,000, and who, before the date fixed for the start of the journey and perhaps before he has incurred any expense, is informed by the other contracting party that he has cancelled or repudiates the contract, is entitled to set off for Hong Kong and produce his report in order to claim in debt the stipulated sum. Such a result is not, in my opinion, in accordance with principle or authority, and cuts across the rule that where one party is in breach of contract the other must take steps to minimise the loss sustained by the breach…
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Notes and questions 1
2
3
The two causes of action, namely, that for debt or money due under the contract and that for damages for breach of contract, are quite different…’ (Davies LJ in Overstone Ltd v Shipway [1962] 1 WLR 117, p 129). Does this mean that if the plaintiff in White & Carter had lost his debt claim he could, at a later date, have brought a quite separate damages action? Might it be an abuse of a right to sue in debt rather than damages? Does equity have a doctrine of abuse of rights? Does the common law? What about EU law? What is meant by legitimate interest’ in this context? Attica Sea Carriers Corporation v Ferrostaal Poseidon [1976] 1 LI Rep 250 Court of Appeal This was an action for debt brought by the owners of a ship against the hirers of the vessel. The hirers were under a contractual duty to redeliver the ship in good repair, but, owing to engine trouble, it transpired that to put the ship in good repair would cost over twice its actual value. The hirers accordingly tried to redeliver the ship without the full repairs being done. The owners refused to accept redelivery and were thus claiming the hire fees for the whole period during which the ship remained unrepaired. The Court of Appeal held that the owners ought to have accepted redelivery and thus were not entitled to sue in debt. They were entitled only to damages. Lord Denning MR:… [White & Carter (Councils) Ltd v McGregor] has no application whatever in a case where the plaintiff ought, in all reason, to accept the repudiation and sue for damages—provided that damages would provide an adequate remedy for any loss suffered by him. The reason is because, by suing for the money, the plaintiff is seeking to enforce specific performance of the contract—and he should not be allowed to do so when damages would be an adequate remedy… [The owners] cannot sue for specific performance—either of the promise to pay the charter hire, or of the promise to do the repairs—because damages are an adequate remedy for the breach. What is the alternative which the shipowners present to the charterers? Either the charterers must pay the charter hire for years to come, whilst the vessel lies idle and useless for want of repair. Or the charterers must do the repairs which would cost twice as much as the ship would be worth when repaired—after which the shipowners might sell it as scrap, making the repairs a useless waste of money. In short, on either alternative, the shipowners seek to compel specific performance of one or other of the provisions of the charter—with most unjust and unreasonable consequences—when damages would be an adequate remedy. I do not think the law allows them to do this.
Questions 1
Is it true to say that English law is reluctant specifically to enforce contracts? 235
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2 3
Were the owners abusing their right? Did equity prevent them suing in debt? Could this case be seen as one where the owners were not acting in good faith? Rowland v Divall [1923] 2 KB 500 Court of Appeal This was an action for money had and received by a purchaser of a car, which subsequently turned out to be stolen and had to be surrendered to its true owner, for the return of the price paid. The Court of Appeal allowed the purchaser to recover the full price. Atkin LJ:… It seems to me that in this case there has been a total failure of consideration, that is to say that the buyer has not got any part of that for which he paid the purchase money. He paid the money in order that he might get the property, and he has not got it. It is true that the seller delivered to him the de facto possession, but the seller had not got the right to possession and consequently could not give it to the buyer. Therefore the buyer, during the time that he had the car in his actual possession had no right to it, and was at all times liable to the true owner for its conversion. Now there is no doubt that what the buyer had a right to get was the property in the car, for the Sale of Goods Act expressly provides that in every contract of sale there is an implied condition that the seller has a right to sell; and the only difficulty that I have felt in this case arises out of the wording of s 11, sub-s 1(c), which says that: ‘Where a contract of sale is not severable, and the buyer has accepted the goods…the breach of any condition to be fulfilled by the seller can only be treated as a breach of warranty, and not as a ground for rejecting the goods and treating the contract as repudiated, unless there be a term of the contract, express or implied, to that effect.’ It is said that this case falls within that provision, for the contract of sale was not severable and the buyer had accepted the car. But I think that the answer is that there can be no sale at all of goods which the seller has no right to sell. The whole object of a sale is to transfer property from one person to another. And I think that in every contract of sale of goods there is an implied term to the effect that a breach of the condition that the seller has a right to sell the goods may be treated as a ground for rejecting the goods and repudiating the contract notwithstanding the acceptance, within the meaning of the concluding words of sub-s (c); or in other words that the sub-section has no application to a breach of that particular condition. It seems to me that in this case there must be a right to reject, and also a right to sue for the price paid as money had and received on failure of the consideration, and further that there is no obligation on the part of the buyer to return the car, for ex hypothesi the seller had no right to receive it. Under those circumstances can it make any difference that the buyer has used the car before he found out that there was a breach of the condition? To my mind it makes no difference at all. The buyer accepted the car on the representation of the seller that he had a right to sell it, and inasmuch as the seller had no such right he is not entitled to say that the buyer has enjoyed a benefit under the contract. In fact, the buyer has not received any part of that which he contracted to receive—namely, the property and right to possession—and, that being so,
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Remedies there has been a total failure of consideration. The plaintiff is entitled to recover the £334 which he paid.
Questions 1
2 3 4
Is this case the reverse side of the coin, so to speak, of Bolton v Mahadeva (above, p 226)? Did the plaintiff, by succeeding in debt, get a benefit that he did not have to pay for? What is meant by total failure of consideration? Was the consideration for the promise to pay the price that title actually be transferred? Was the plaintiffs claim based on contract? Would Rowland v Divall be decided the same way today? (See Barber v NWS Bank [1996] 1 WLR 641.)
(b) Debt and damages Wadsworth v Lydall [1981] 1 WLR 598 Court of Appeal Brightman LJ:… The second question on the appeal is a little more difficult. It is whether the plaintiff is entitled to recover as special damages the loss which he has suffered as a result of the defendant’s failure to pay his debt under the contract on the due date… The defendant contends that…although interest can be awarded nowadays under [statute], damages cannot be awarded in respect of unpaid indebtedness. The plaintiff is confined, the defendant says, to such interest as he is able to claim under the [statute], but is not entitled to damages… In my view the court is not so constrained by the decision of the House of Lords. In London, Chatham and Dover Railway Co v South Eastern Railway Co [1893] AC 429, the House of Lords was not concerned with a claim for special damages. The action was an action for an account. The House was concerned only with a claim for interest by way of general damages. If a plaintiff pleads and can prove that he has suffered special damages as a result of the defendant’s failure to perform his obligation under a contract, and such damage is not too remote on the principle of Hadley v Baxendale (1854) 9 Exch 341, I can see no logical reason why such special damage should be irrecoverable merely because the obligation on which the defendant defaulted was an obligation to pay money and not some other type of obligation… Ormrod LJ:… The court has to look not at what this particular defendant knew or contemplated but what a reasonable person in his position would have contemplated… This case is not on all fours with—and can be distinguished from—the London, Chatham and Dover case and clearly ought to be so distinguished.
Questions 1
Is it an abuse of a right when a debtor fails to pay a debt on time and this causes damage to the creditor? Or is it a simple breach of contract causing damage? 237
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2
Why has the common law been so reluctant to award interest on debts not paid on time? (Cf Lord Woolf in Westdeutsche Landesbank, p 799.) Damon Compania Naviera SA v Hapag-Lloyd [1985] 1 WLR 435 Court of Appeal This was an action for damages brought by a seller of three ships against prospective buyers who, in breach of a contract concluded via telexes, failed to sign a formal contract of purchase. The telex contract contained a clause that a deposit of 10% would be payable on the signing of the formal contract. The disappointed sellers claimed this 10% by way of damages, and a majority of the Court of Appeal upheld their claim. Fox LJ:… Damages for breach of contract are a compensation for the loss which the plaintiff has suffered through the breach. Accordingly, the plaintiff is entitled to be placed in the same position as if the contractual obligation had been performed. In the present case, if the obligation had been performed, Hapag-Lloyd could have sued Damon in debt for the amount of the deposit and it seems to me that that should be reflected in the damages recoverable for breach of the obligation. Robert Goff LJ (dissenting):… If the repudiation occurred after Damon had paid the deposit, Hapag-Lloyd would be safe: they would have the deposit and could keep it. If the repudiation occurred after the obligation to pay the deposit had accrued due, but before Damon had paid it, HapagLloyd could sue Damon for the deposit as a debt… But if the repudiation occurred before Damon’s obligation to pay the deposit had fallen due, then Hapag-Lloyd could only recover damages for repudiation, which would fall to be assessed on the usual basis of compensating Hapag-Lloyd for the loss of their bargain… The normal measure, in a contract of sale of goods, is of course the difference between the contract and market prices for the goods. I can see no reason for departing from that ordinary measure of damages in the present case. To award Hapag-Lloyd damages assessed on the basis of the amount of the deposit would be to compare their present position with what their position would have been if the contract had only been partially performed (that is, the deposit paid), and not with their position if the contract had been performed in full; if damages were assessed in that way, they would be over-compensated for the loss of their bargain. In truth, the inability of Hapag-Lloyd to obtain the protection of the deposit, in the circumstances of the present case, flows from their contracting on such terms that the deposit was not payable forthwith upon the making of the contract. Stephenson LJ:… On the last point I am attracted by the logic of Robert Goff LJ’s contrary opinion. But the measure of damages resulting from Damon’s repudiatory breach is, in my opinion, the loss directly and naturally resulting from the breach in the ordinary course of events, and I agree with Fox LJ that that loss is the amount of the deposit…
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Questions 1
2 3
What interest does an action in debt protect? Is this an interest that is always protected by an action in damages? What must the plaintiff show in order to succeed in protecting this interest via damages? What was the cause of the plaintiffs’ loss? Is Damon still good authority after Ruxley Electronics v Forsyth (below, p 301)?
(c) Non-contractual debt United Australia Ltd v Barclays Bank Ltd [1941] AC 1 House of Lords (Seep 781.) Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32 House of Lords (See p 778.) The Aldora [1975] QB 748 Queen’s Bench Brandon J:… I do not think that a claim for salvage is a proceeding for the recovery of damages, and the question is accordingly reduced to this: whether it is a proceeding for the recovery of a debt. As to this it is to be observed that the words used are ‘any debt’, indicating that the net is being spread as widely as possible. Those words are, as it seems to me, apt to cover sums, whether liquidated or unliquidated, which a person is obliged to pay either under a contract, express or implied, or under a statute. They would, therefore, cover a common law claim on a ‘quantum meruit’, or a statutory claim for a sum recoverable as a debt, for instance a claim for damages done to harbour works under s 74 of the Harbour, Docks, and Piers Clauses Act 1847. Friends’ Provident Life Office v Hillier Parker May and Rowden [1997] QB 85 Court of Appeal (See also p 620.) Auld LJ:… As to the judge’s reliance on the special provision for debt in s 3 [of the Civil Liability (Contribution) Act 1978], an action of debt is, historically and in everyday parlance, quite distinct from a claim for compensation for damage. It is true that a claim for restitution in quasi-contract may in some respects be close to a claim in debt because of the former’s origin in indebitatus assumpsit (see Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd [1943] AC 32, pp 61–63, per Lord Wright). However, indebitatus assumpsit, as its name indicates, was, when it developed in the 16th and 17th centuries, a hybrid of an action on a (fictitious) contract and in debt. Its origin, explained by FW Maitland in his Forms of Action at Common Law, 1936, pp 63, 68–70, was quite distinct from that of debt, and delictual in nature. It emerged as an offshoot of the action on the case, developing into the action of assumpsit and then indebitatus assumpsit, largely supplanting debt (see also Goff and Jones, 239
Sourcebook on Obligations and Remedies Chapter 1). Even though the need for precise categorisation has disappeared since the Common Law Procedure Act 1852, the hybrid character of indebitatus assumpsit and its modern manifestation, quasi-contract, lingered on (see, for example, Sinclair v Brougham [1914] AC 398, p 452, per Lord Sumner). In any event, for the reasons I have given, even if the judge was right in associating a claim for restitution in quasi-contract with an action for debt, that would not exclude it from being a claim for compensation in respect of damage in quasi-contract within the meaning of ss 1(1) and 6(1) of the 1978 Act…
Notes and questions 1
2
If the focal point of an action for damages is loss, what is the focal point for an action in debt? Is it helpful to associate restitution claims with damages claims? The common law recognises three categories of non-contractual debt claims: (a) the action for money had and received; (b) the action for money paid; and (c) an action on a quantum meruit (see Chapter 8). What is the obligation basis of these claims? Is this an area where civil law learning can be helpful? What is the relationship, if any, between these common law claims and equitable remedies? (Cf Asquith LJ, above, p 85.)
6 TRACING Agip (Africa) Ltd v Jackson [1990] Ch 265 Chancery Division; [1991] Ch 547 Court of Appeal This was an action in common law for money had and received and in equity for tracing in respect of money which had fraudulently been embezzled from the plaintiffs and disseminated through a number of bank accounts. The Court of Appeal confirmed that the plaintiff could succeed in equity but not at common law. Millet J (Chancery Division):… The plaintiffs claim to recover money paid under a mistake… Unlike a tracing claim in equity, the common law claim for money had and received is a personal and not a proprietary claim and the cause of action is complete when the money is received. With only limited exceptions, it is no defence that the defendant has parted with the money. The claim does not depend on any impropriety or want of probity on the part of the defendants… Tracing at common law … Tracing at common law, unlike its counterpart in equity, is neither a cause of action nor a remedy but serves an evidential purpose. The cause of action is for money had and received. Tracing at common law enables the defendant to be identified as the recipient of the plaintiffs money and the measure of his liability to be determined by the amount of the plaintiffs money he is shown to have received. 240
Remedies The common law has always been able to follow a physical asset from one recipient to another. Its ability to follow an asset in the same hands into a changed form was established in Taylor v Plumer 3 M & S 562. In following the plaintiffs money into an asset purchased exclusively with it, no distinction is drawn between a chose in action such as the debt of a bank to its customer and any other asset: In re Diplock [1948] Ch 465, p 519. But it can only follow a physical asset, such as a cheque or its proceeds, from one person to another. It can follow money but not a chose in action. Money can be followed at common law into and out of a bank account and into the hands of a subsequent transferee, provided that it does not cease to be identifiable by being mixed with other money in the bank account derived from some other source: Banque Belge pour l’Étranger v Hambrouck [1921] 1 KB 321… The cause of action for money had and received is complete when the plaintiff’s money is received by the defendant. It does not depend on the continued retention of the money by the defendant. Save in strictly limited circumstances it is no defence that he has parted with it. A fortiori it can be no defence for him to show that he has so mixed it with his own money that he cannot tell whether he still has it or not. Mixing by the defendant himself must, therefore, be distinguished from mixing by a prior recipient. The former is irrelevant, but the latter will destroy the claim, for it will prevent proof that the money received by the defendant was the money paid by the plaintiff… That case [Banque Belge] apart, there is none so far as I am aware in which a claim for money had and received has been successfully brought against anyone other than the immediate recipient of the money or his principal. In that case H obtained by fraud from his employer a number of cheques purporting to be drawn by the employer on the plaintiff bank. He paid the cheques into a bank account in his own name. His bank collected the proceeds from the plaintiff bank and credited them to H’s account. H then drew cheques on his account in favour of S, his mistress, who paid them into her own account at her own bank. She spent most of the money but a balance of £315 remained. This sum was paid into court by her bank and was claimed by the plaintiff bank. The plaintiff bank was held entitled to it. It is not easy to know what that case decided. The plaintiff bank sought a declaration that the £315 was its property. The relief it claimed was not a money judgment but an order for payment of the £315. In other words, it was making a proprietary claim. The trial judge, however, treated it as a common law action for money had and received and entered an ordinary money judgment against S for the sum claimed. Her appeal was dismissed. The plaintiff had limited its claim to the £315 in court. That was also consistent with a proprietary claim, though the decision to limit the claim may have been due to other considerations. But there is no hint in any of the judgments in the Court of Appeal that the claim need not have been so limited; although if S was in truth personally accountable for money had and received, the fact that she had dissipated the money was irrelevant. On the contrary, Banks LJ was concerned to show that the money had not been mixed in her account, which indicates that he considered the claim to be a proprietary one in which it was necessary to establish not what S had received but what she still retained.
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Sourcebook on Obligations and Remedies Scrutton LJ held that the money could be traced in equity. It is not clear whether he relied on this to support the common law claim or to found relief in equity, but since the plaintiff had limited its claim to the £315, this made no difference to the result. Atkin LJ alone drew attention to the difference between the two types of claim. He, too, held that the money could be followed in equity, and that this entitled the plaintiff to a specific order for the return of the money in question. He then dealt expressly with the common law action for money had and received and held that the plaintiffs ability to follow the money at common law entitled it to bring such an action. I think that at first instance I am bound to regard that case as authority for the proposition that an action for money had and received is not limited to the immediate recipient or his principal but may be brought against a subsequent transferee into whose hands the money can be followed and who still retains it. But it is no authority for the proposition that it lies against a subsequent transferee who has parted with the money, and I doubt that it does. At this remove the action begins to take on the aspect of a proprietary claim rather than the enforcement of a personal liability to account. Should it be sought to impose personal liability on a person who has parted with the money, recourse can be made to equity which has developed appropriate principles by which such liability can be determined. The alternative is to expose an innocent transferee who has dissipated the money to a claim at law where none would exist in equity and to make that liability depend on the fortuitous circumstance that the money had not been mixed with other money prior to its receipt by him. Such a difference in outcome cannot be justified as reflecting the fact that in one case the defendant is being required to account to the former legal owner while in the other he is accounting merely to an owner in equity, for the equitable remedies are available to the former legal owner who has been deprived of his property as the result of a breach of fiduciary obligation… There is no difficulty in tracing the plaintiffs’ money in equity, which has well developed principles by which the proceeds of fraud can be followed and recovered from those through whose hands they pass. Whether equity can make its tracing rules available in aid of common law remedies, or whether, as I think, it would be preferable to develop a unified restitutionary remedy for the recovery of property transferred without consideration to a recipient with no legitimate justification for receiving it, are questions which must be left for others to decide. There is certainly no need for recourse to the common law action for money had and received, which is not well equipped for the task. In my judgment, the plaintiffs’ attempted reliance on the common law was unnecessary and misplaced. The claim in equity There is no difficulty in tracing the plaintiffs’ property in equity, which can follow the money as it passed through the accounts of the correspondent banks in New York or, more realistically, follow the chose in action through its transmutation as a direct result of forged instructions from a debt owed by the Banque du Sud to the plaintiffs in Tunis into a debt owed by Lloyds Bank to Baker Oil in London. The only restriction on the ability of equity to follow assets is the requirement that there must be some fiduciary relationship which permits the assistance 242
Remedies of equity to be invoked. The requirement has been widely condemned and depends on authority rather than principle, but the law was settled by In re Diplock [1948] Ch 465. It may need to be reconsidered but not, I venture to think, at first instance. The requirement may be circumvented since it is not necessary that the fund to be traced should have been the subject of fiduciary obligations before it got into the wrong hands; it is sufficient that the payment to the defendant itself gives rise to a fiduciary relationship: Chase Manhattan Bank NA v Israel-British Bank (London) Ltd [1981] Ch 105. In that case, however, equity’s assistance was not needed in order to trace the plaintiffs money into the hands of the defendant; it was needed in order to ascertain whether it had any of the plaintiff’s money left. The case cannot, therefore, be used to circumvent the requirement that there should be an initial fiduciary relationship in order to start the tracing process in equity. The requirement is, however, readily satisfied in most cases of commercial fraud, since the embezzlement of a company’s funds almost inevitably involves a breach of fiduciary duty on the part of one of the company’s employees or agents… The tracing remedy The tracing claim in equity gives rise to a proprietary remedy which depends on the continued existence of the trust property in the hands of the defendant. Unless he is a bona fide purchaser for value without notice, he must restore the trust property to its rightful owner if he still has it. But even a volunteer who has received trust property cannot be made subject to a personal liability to account for it as a constructive trustee if he has parted with it without having previously acquired some knowledge of the existence of the trust: In re Montagu’s Settlement Trusts [1987] Ch 264. The plaintiffs are entitled to the money in court which rightfully belongs to them. To recover the money which the defendants have paid away the plaintiffs must subject them to a personal liability to account as constructive trustees and prove the requisite degree of knowledge to establish the liability… Knowing assistance A stranger to the trust will also be liable to account as a constructive trustee if he knowingly assists in the furtherance of a fraudulent and dishonest breach of trust. It is not necessary that the party sought to be made liable as a constructive trustee should have received any part of the trust property, but the breach of trust must have been fraudulent. The basis of the stranger’s liability is not receipt of trust property but participation in a fraud… In my judgment, it necessarily follows that constructive notice of the fraud is not enough to make him liable. There is no sense in requiring dishonesty on the part of the principal while accepting negligence as sufficient for his assistant. Dishonest furtherance of the dishonest scheme of another is an understandable basis for liability; negligent but honest failure to appreciate that someone else’s scheme is dishonest is not… Fox LJ (Court of Appeal):… Agip’s claim was for money paid under a mistake
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Sourcebook on Obligations and Remedies of fact. The defendants’ contention was that Agip had disclosed no title to sue. The basis of that contention was that the relationship between banker and customer was one of debtor and creditor. When the customer paid money into the bank, the ownership of the money passed to the bank. The bank could do what it liked with it. What the bank undertook to do was to credit the amount of the money to the customer’s account, and to honour his drafts or other proper directions in relation to it… The banker’s instruction is to pay from the customer’s account. He does so by a payment from his own funds and a corresponding debit. The reality is a payment by the customer, at any rate in a case where the customer has no right to require a re-crediting of his account. Nothing passes in specie. The whole matter is dealt with by accounting transactions partly in the paying bank and partly in the clearing process… The order, after all, was an order to pay with Agip’s money. I agree, therefore, with the view of Millett J [1990] Ch 265, p 283H, that ‘the fact remains that the Banque du Sud paid out the plaintiffs’ money and not its own’. If Banque du Sud paid away Agip’s money, Agip itself must be entitled to pursue such remedies as there may be for its recovery. The money was certainly paid under a mistake of fact… Tracing at common law The judge held that Agip was not entitled to trace at law. Tracing at law does not depend upon the establishment of an initial fiduciary relationship. Liability depends upon receipt by the defendant of the plaintiff’s money and the extent of the liability depends on the amount received. Since liability depends upon receipt the fact that a recipient has not retained the asset is irrelevant. For the same reason dishonesty or lack of inquiry on the part of the recipient are irrelevant. Identification in the defendant’s hands of the plaintiff’s asset is, however, necessary. It must be shown that the money received by the defendant was the money of the plaintiff. Further, the very limited common law remedies make it difficult to follow at law into mixed funds… Tracing in equity Both common law and equity accepted the right of the true owner to trace his property into the hands of others while it was in an identifiable form. The common law treated property as identified if it had not been mixed with other property. Equity, on the other hand, will follow money into a mixed fund and charge the fund. There is, in the present case, no difficulty about the mechanics of tracing in equity. The money can be traced through the various bank accounts to Baker Oil and onwards. It is, however, a prerequisite to the operation of the remedy in equity that there must be a fiduciary relationship which calls the equitable jurisdiction into being… Boscawen v Bajwa [1995] 4 All ER 769 Court of Appeal This was a counterclaim by a building society to be subrogated to the rights of a mortgagee in respect of a charge on a house. The building society ‘claims to be entitled to the benefit of the charge in equity by subrogation, by reason of the fact that it provided virtually the whole of the money with which it was discharged’ (Millett LJ). The Court of Appeal upheld the counterclaim.
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Remedies Millett LJ:… Equity lawyers habitually use the expressions ‘the tracing claim’ and ‘the tracing remedy’ to describe the proprietary claim and the proprietary remedy which equity makes available to the beneficial owner who seeks to recover his property in specie from those into whose hands it has come. Tracing properly so called, however, is neither a claim nor a remedy but a process. Moreover, it is not confined to the case where the plaintiff seeks a proprietary remedy; it is equally necessary where he seeks a personal remedy against the knowing recipient or knowing assistant. It is the process by which the plaintiff traces what has happened to his property, identifies the persons who have handled or received it, and justifies his claim that the money which they handled or received (and if necessary which they still retain) can properly be regarded as representing his property. He needs to do this because his claim is based on the retention by him of a beneficial interest in the property which the defendant handled or received. Unless he can prove this, he cannot (in the traditional language of equity) raise an equity against the defendant or (in the modern language of restitution) show that the defendant’s unjust enrichment was at his expense. In such a case, the defendant will either challenge the plaintiff’s claim that the property in question represents his property (that is, he will challenge the validity of the tracing exercise), or he will raise a priority dispute (for example, by claiming to be a bona fide purchaser without notice). If all else fails, he will raise the defence of innocent change of position. This was not a defence which was recognised in England before 1991, but it was widely accepted throughout the common law world. In Lipkin German (A Firm) v Karpnale Ltd [1991] 2 AC 548, the House of Lords acknowledged it to be part of English law also. The introduction of this defence not only provides the court with a means of doing justice in future, but allows a re-examination of many decisions of the past in which the absence of the defence may have led judges to distort basic principles in order to avoid injustice to the defendant. If the plaintiff succeeds in tracing his property, whether in its original or in some changed form, into the hands of the defendant and overcomes any defences which are put forward on the defendant’s behalf, he is entitled to a remedy. The remedy will be fashioned to the circumstances. The plaintiff will generally be entitled to a personal remedy; if he seeks a proprietary remedy he must usually prove that the property to which he lays claim is still in the ownership of the defendant. If he succeeds in doing this, the court will treat the defendant as holding the property on a constructive trust for the plaintiff and will order the defendant to transfer it in specie to the plaintiff. But this is only one of the proprietary remedies which is available to a court of equity. If the plaintiff’s money has been applied by the defendant, for example, not in the acquisition of a landed property but in its improvement, then the court may treat the land as charged with the payment to the plaintiff of a sum representing the amount by which the value of the defendant’s land has been enhanced by the use of the plaintiff’s money. And if the plaintiff’s money has been used to discharge a mortgage on the defendant’s land, then the court may achieve a similar result by treating the land as subject to a charge by way of subrogation in favour of the plaintiff… (See also p 269.)
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Questions 1 2
3 4 5
Is tracing at common law based on a right of property in the money? Is this right a right in rem? Millett LJ describes tracing as neither a cause of action nor a remedy, but something which ‘serves an evidential purpose’ or a ‘process’. What does he mean? Is he inventing a new concept? What is the relationship between tracing at common law and an action for money had and received? Will tracing at common law ever be available in circumstances where tracing in equity is not available? If so, in what circumstances? E steals £500 from P, his employer, and gives the cash to his mother, D, who invests it on the stock exchange and ends up with £50,000. Can P claim the £50,000 from D? What if D had invested the money in an old painting that turned out to be worth £50,000: could P claim the painting? In re Goldcorp Exchange Ltd [1995] 1 AC 74 Privy Council Lord Mustill: On 11 July 1988 the Bank of New Zealand Ltd…caused receivers to be appointed under the terms of a debenture issued by Goldcorp Exchange Ltd…dealer in gold and other precious metals. The company was then and still remains hopelessly insolvent… The discovery that not only was there a shortfall in available bullion but also that the stock of bullion had been dealt with internally in a manner quite different from what had been promised by the vendors in their promotional literature has aroused great indignation amongst the members of the public (more than 1,000) whose faith in the promises made by the vendors has proved to be misplaced. These feelings were exacerbated when it was realised that the debt secured by the debenture and the floating charge which it created were in excess of the entire assets of the company, including the stocks of bullion, so that if the secured interest of the bank is satisfied in preference to the claims of the purchasers, the latter will receive nothing at all. This has impelled the private investors…to assert in the liquidation of the company, not their unanswerable personal claims against the company for damages or for the repayment of sums paid in advance, but claims of a proprietary nature… In the High Court all the claims were founded on the proposition that the customers had, or must be deemed to have, proprietary interests in the bullion which could be traced into the stock remaining on liquidation… Their Lordships begin with the question whether the customer obtained any form of proprietary interest, legal or equitable, simply by virtue of the contract of sale, independently of the collateral promises. In the opinion of their Lordships, the answer is so clearly that he did not that it would be possible simply to quote…s 16 of the Sale of Goods Act 1893…and one reported case, and turn to more difficult issues. It is common ground that the contracts in question were for the sale of unascertained goods… Approaching these situations a priori common sense dictates that the buyer cannot acquire title until it is known to what goods the title relates. Whether 246
Remedies the property then passes will depend upon the intention of the parties and in particular on whether there has been a consensual appropriation of particular goods to the contract… A more plausible…argument posits that the company, having represented to its customers that they had title to bullion held in the vaults, cannot now be heard to say that they did not. At first sight, this argument gains support from a small group of cases, of which Knights v Wiffen (1870) LR 5 QB 660 is the most prominent… Assuming that the decision was nevertheless correct the question is whether it applies to the present case. Their Lordships consider that, notwithstanding the apparent similarities, it does not… The present case is quite different, for there was no existing bulk and therefore nothing from which a title could be carved out by a deemed appropriation. The reasoning of Knights v Wiffen does not enable a bulk to be conjured into existence for this purpose simply through the chance that the vendor happens to have some goods answering the description of the res vendita in its trading stock at the time of the sale— quite apart, of course, from the fact that if all the purchasers obtained a deemed title by estoppel there would not be enough bullion to go around… Let it be assumed, however, that the company could properly be described as a fiduciary and let it also be assumed that notwithstanding the doubts expressed above the non-allocated claimants would have achieved some kind of proprietary interest if the company had done what it said. This still leaves the problem, to which their Lordships can see no answer, that the company did not do what it said. There never was a separate and sufficient stock of bullion in which a proprietary interest could be created. What the nonallocated claimants are really trying to achieve is to attach the proprietary interest, which they maintain should have been created on the non-existent stock, to wholly different assets. It is understandable that the claimants, having been badly let down in a transaction concerning bullion should believe that they must have rights over whatever bullion the company still happens to possess. Whilst sympathising with this notion their Lordships must reject it, for the remaining stock, having never been separated, is just another asset of the company, like its vehicles and office furniture. If the argument applies to the bullion it must apply to the latter as well, an obviously unsustainable idea… Finally, it is argued that the court should declare in favour of the claimants a remedial constructive trust, or to use another name a restitutionary proprietary interest, over the bullion in the company’s vaults… Their Lordships…are unable to understand how the doctrine in any of its suggested formulations could apply to the facts of the present case. By leaving its stock of bullion in a non-differentiated state the company did not unjustly enrich itself by mixing its own bullion with that of the purchasers: for all the gold belonged to the company. It did not act wrongfully in acquiring, maintaining and using its own stock of bullion, since there was no term of the sale contracts or of the collateral promises, and none could possibly be implied, requiring that all bullion purchased by the company should be set aside to fulfil the unallocated sales. The conduct of the company was wrongful in the sense of being a breach of contract, but it did not involve any injurious dealing with the subject matter of the alleged trust… The company’s stock of bullion had no connection 247
Sourcebook on Obligations and Remedies with the claimants’ purchases, and to enable the claimants to reach out and not only abstract it from the assets available to the body of creditors as a whole, but also to afford a priority over a secured creditor, would give them an adventitious benefit devoid of the foundation in logic and justice which underlies this important new branch of the law… Whilst it is convenient to speak of the customers ‘getting their money back’ this expression is misleading. Upon payment by the customers the purchase moneys became, and rescission or no rescission remained, the unencumbered property of the company. What the customers would recover on rescission would not be ‘their’ money, but an equivalent sum. Leaving aside for the moment the creation by the court of a new remedial proprietary right, to which totally different considerations would apply, the claimants would have to contend that in every case where a purchaser is misled into buying goods he is automatically entitled upon rescinding the contract to a proprietary right superior to those of all the vendor’s other creditors, exercisable against the whole of the vendor’s assets. It is not surprising that no authority could be cited for such an extreme proposition… It may be…that where one party mistakenly makes the same payment twice it retains a proprietary interest in the second payment which (if tracing is practicable) can be enforced against the payees’ assets in a liquidation ahead of unsecured creditors. But in the present case, the customers intended to make payment, and they did so because they rightly conceived that that was what the contracts required… As in the case of the misrepresentation, the alleged mistake might well have been a ground for setting aside the contract if the claimants had ever sought to do so, and in such a case they would have had a personal right to recover the sum equivalent to the amount paid. But even if they had chosen to exercise this right, it would not by operation of law have carried with it a proprietary interest… There remains the question whether the court should create after the event a remedial restitutionary right superior to the security created by the charge. The nature and foundation of this remedy were not clearly explained in argument. This is understandable, given that the doctrine is still in an early stage and no single juristic account of it has yet been generally agreed… The bank relied on the floating charge to protect its assets; the customers relied on the company to deliver the bullion and to put in place the separate stock. The fact that the claimants are private citizens whereas their opponent is a commercial bank could not justify the court in simply disapplying the bank’s valid security. No case cited has gone anywhere near to this, and the Board would do no service to the nascent doctrine by stretching it past breaking point. So far as concerns an equitable interest deemed to have come into existence from the moment when the transaction was entered into, it is hard to see how this could coexist with a contract which, so far as anyone knew, might be performed by actual delivery of the goods. And if there was no initial interest, at what time before the attachment of the security, and by virtue of what event, could the court deem a proprietary right to have arisen? None that their Lordships are able to see…
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Remedies For these reasons the Board must reject all the ways in which the non-allocated claimants assert a proprietary interest over the purchase price and its fruits…
Questions 1 Did the company not enrich itself as a result of its breaches of contract? 2 Does not a person who mistakenly makes the same payment twice nevertheless intend to make the second payment? 3 If the bullion company was a fiduciary, why should equity be prevented from intervening with its remedy of an equitable lien over the purchase price? 4 If the bullion company asserted that the customers had property rights, why should the company not be estopped from denying this assertion? Is not the existence of the res itself irrelevant? Or, alternatively, could it not be said that the company is estopped from denying the existence of the res?
7 SPECIFIC PERFORMANCE Principles of European Contract Law Article 9.102 Non-monetary obligations (1) (2)
The aggrieved party is entitled to specific performance of an obligation other than one to pay money, including the remedying of a defective performance. Specific performance cannot, however, be obtained where: (a) (b (c) (d)
(3)
performance would be unlawful or impossible; or performance would cause the obligor unreasonable effort or expense; or the performance consists in the provision of services or work of a personal character or depends upon a personal relationship, or the aggrieved party may reasonably obtain performance from another source.
The aggrieved party will lose the right to specific performance if it fails to seek it within a reasonable time after it has or ought to have become aware of the non-performance.
Beswick v Beswick [1968] AC 58 House of Lords Lord Guest: My Lords, by agreement, dated 14 March 1962, the late Peter Beswick assigned to Joseph Beswick his business as coal merchant in consideration of Joseph employing Peter as a consultant for the remainder of his life at a weekly salary of £6 10s 0d. For the like consideration Joseph, in the event of Peter’s death, agreed to pay his widow an annuity charged on the business at the rate of £5 per week. Peter Beswick died on 3 November 1963, and the respondent is the administratrix of his estate. She claims in 249
Sourcebook on Obligations and Remedies these proceedings personally and as administratrix of her late husband against Joseph Beswick the appellant for specific performance of the agreement and for payment of the annuity… The first question is whether the respondent as administratrix of the estate of the late Peter Beswick is entitled to specific performance of the agreement of 14 March 1962. On this matter I have had the opportunity of reading the speech of my noble and learned friend, Lord Reid. I agree with him in thinking that the respondent is entitled to succeed on this branch of the case Lord Reid:… [T]he respondent in her personal capacity has no right to sue, but she has a right as administratrix of her husband’s estate to require the appellant to perform his obligation under the agreement. He has refused to do so and he maintains that the respondent’s only right is to sue him for damages for breach of his contract. If that were so, I shall assume that he is right in maintaining that the administratrix could then recover only nominal damages, because his breach of contract has caused no loss to the estate of her deceased husband. If that were the only remedy available the result would be grossly unjust. It would mean that the appellant keeps the business which he bought and for which he has only paid a small part of the price which he agreed to pay… I am of opinion that specific performance ought to be orderedi… Lord Hodson:… It is no part of the law that in order to sue on a contract one must establish that it is in one’s interest to do so… In such a case as this, there having been an unconscionable breach of faith, the equitable remedy sought is apt. The appellant has had the full benefit of the contract and the court will be ready to see that he performs his part… Lord Pearce: My Lords, if the annuity had been payable to a third party in the lifetime of Beswick, senior, and there had been default, he could have sued in respect of the breach. His administratrix is now entitled to stand in his shoes and to sue in respect of the breach which has occurred since his death. It is argued that the estate can recover only nominal damages and that no other remedy is open, either to the estate or to the personal plaintiff. Such a result would be wholly repugnant to justice and common sense. And if the argument were right it would show a very serious defect in the law… The administratrix is entitled, if she so prefers, to enforce the agreement rather than accept its repudiation, and specific performance is more convenient than an action for arrears of payment followed by separate actions as each sum falls due. Moreover, damages for breach would be a less appropriate remedy since the parties to the agreement were intending an annuity for a widow, and a lump sum of damages does not accord with this; and if (contrary to my view) the argument that a derisory sum of damages is all that can be obtained be right, the remedy of damages in this case is manifestly useless. The present case presents all the features which led the equity courts to apply their remedy of specific performance. The contract was for the sale of a business. The appellant could on his part clearly have obtained specific performance of it if Beswick senior or his
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Remedies administratrix had defaulted. Mutuality is a ground in favour of specific performance. Moreover, the appellant on his side has received the whole benefit of the contract and it is a matter of conscience for the court to see that he now performs his part of it… Lord Upjohn:… In this case the court ought to grant a specific performance order all the more because damages are nominal. [The defendant] has received all the property; justice demands that he pay the price and this can only be done in the circumstances by equitable relief…
Questions 1
2
3
4
Does it not seem a little bizarre that equity should order specific performance of a common law duty of specific performance (see p 235, above)? Is it really the law that a person who has no interest in the performance of a contract can sue for a remedy for breach of the contract? Would it not have been better to treat this problem as one of unjust enrichment? Or transferred loss? Did Mrs Beswick have an interest in the performance of the contract? Could equity have intervened in White v Jones (p 702) on behalf of the third party (plaintiff)? What equitable remedy might have been appropriate? The contractor (nephew) in Beswick intentionally refused to perform his contractual duty and this caused a loss of expectation to a third party (Mrs Beswick). If he had carelessly forgotten to pay her, could she have sued him for damages in the tort of negligence? (Cf White v Jones, p 702.) Price v Strange [1978] Ch 337 Court of Appeal The question before the Court of Appeal in this case was whether a tenant could obtain an order for specific performance of an oral agreement with his landlord to grant a sub-lease. The tenant had performed a substantial part of his side of the agreement (which included certain repairs), but the trial judge dismissed the claim for specific performance for lack of mutuality at the date of the contract. That is to say, that as the defendant could not have obtained specific performance in respect of her rights under the agreement, it would be inequitable for the remedy to be available to the other party. The Court of Appeal allowed an appeal and ordered specific performance subject to certain terms. Buckley LJ:… I will first deal with the question of mutuality. It is easy to understand that, as the equitable jurisdiction to enforce specific performance of contractual obligations developed, it should have become an accepted rule that equity would not compel one party to perform his obligations specifically in accordance with the terms of the contract unless it could also ensure that any unperformed obligations of the other party would also be performed specifically. For breaches of some kinds of contract, pre-eminently contracts for the sale of land, the common law remedy of damages was inadequate. The courts of equity consequently supplemented the common law by 251
Sourcebook on Obligations and Remedies introducing the equitable remedy of specific performance, compelling the defendant to carry out his contract instead of penalising him in damages for failing to do so. Considering the position a priori and apart from authority, it would seem that the questions which should be asked by any court which is invited to enforce specific performance of a contractual obligation should be: (1) is the plaintiff entitled to a remedy of some kind in respect of the alleged breach of contract? (2) if so, would damages be an adequate remedy? (3) if not, would specific performance be a more adequate remedy for the plaintiff? (4) if so, would it be fair to the defendant to order him to perform his part of the contract specifically? The first question goes to the validity and enforceability of the contract. Only if it is answered affirmatively do the subsequent questions arise. If the second question is answered affirmatively there is no occasion for equity to interfere, so that again the subsequent questions do not arise. If the second question is answered in the negative it will not necessarily follow that the third question must be answered affirmatively. For instance, the circumstances may not be such as to admit of specific performance, as where the subject matter of the contract no longer exists. Only in the event of the third question arising and being answered in the affirmative can the fourth question arise. It is here, as it seems to me, that the alleged principle of mutuality comes in. If one party were compelled to perform his obligations in accordance with the terms of the contract while the obligations of the other party under the contract, or some of them, remained unperformed, it might be unfair that the former party should be left to his remedy in damages if the latter party failed to perform any of his unperformed obligations. This is a consideration which bears on the appropriateness of specific performance as a remedy in the particular case; it has no bearing on the validity or enforceability of the contract, that is to say, on whether the plaintiff has a cause of action. A contract of which mutual specific performance cannot be enforced may yet afford a good cause of action for a remedy in damages at law… The present case differs from any decided case…in this respect, that, although all the agreed repairs have been done, they have not all been done by the plaintiff. In my judgment, however, this is no bar to the plaintiffs right to a grant of the sub-lease in accordance with the contract. That the plaintiff did not do all the work was not due to any default of his; it was due to the defendant’s unjustified repudiation of the contract. She was, in my opinion, clearly under an implied obligation not to prevent the plaintiff from performing his part of the contract, but she did so. This was an incident of her wrongful repudiation of her obligation to grant him a sub-lease. The financial consequences of the defendant’s having carried out at her own expense work which under the contract should have been done by the plaintiff at his expense could be adjusted by appropriate accounts, enquiries and adjustments under the court’s order…
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Questions 1 2
3
Is mutuality a general principle of the law of contract itself? Could Mrs Beswick have been in breach of contract vis à vis the nephew? What effect would any breach have had on the nephew’s obligation to pay the annuity? Was there mutuality between Mrs Beswick and the nephew? Contracts for the sale of an interest in land had to be in writing (Law of Property Act 1925, s 40, now replaced by the Law of Property (Miscellaneous Provisions) Act 1989, s 2). Why was it, then, that equity was prepared to enforce the oral agreement in Price v Strange? Co-operative Insurance Society Ltd v Argyll Stores Ltd [1998] AC 1 House of Lords Lord Hoffmann: My Lords… In this case… The appellant defendants, Argyll Stores (Holdings) Ltd (‘Argyll’), decided in May 1995 to close their Safeway supermarket in the Hillsborough Shopping Centre in Sheffield because it was losing money. This was a breach of a covenant in their lease, which contained in clause 4(19) a positive obligation to keep the premises open for retail trade during the usual hours of business. Argyll admitted the breach and, in an action by the landlord, Co-operative Insurance Society Ltd (‘CIS’) consented to an order for damages to be assessed. But the Court of Appeal [1996] Ch 286, reversing the trial judge, ordered that the covenant be specifically performed. It made a final injunction ordering Argyll to trade on the premises during the remainder of the term (which will expire on 3 August 2014) or until an earlier subletting or assignment. The Court of Appeal suspended its order for three months to allow time for Argyll to complete an assignment which by that time had been agreed. After a short agreed extension, the lease was assigned with the landlord’s consent. In fact, therefore, the injunction never took effect. The appeal to your Lordships is substantially about costs. But the issue remains of great importance to landlords and tenants under other commercial leases. Specific performance is traditionally regarded in English law as an exceptional remedy, as opposed to the common law damages to which a successful plaintiff is entitled as of right. There may have been some element of later rationalisation of an untidier history, but by the 19th century it was orthodox doctrine that the power to decree specific performance was part of the discretionary jurisdiction of the Court of Chancery to do justice in cases in which the remedies available at common law were inadequate. This is the basis of the general principle that specific performance will not be ordered when damages are an adequate remedy. By contrast, in countries with legal systems based on civil law, such as France, Germany and Scotland, the plaintiff is prima facie entitled to specific performance. The cases in which he is confined to a claim for damages are regarded as the exceptions. In practice, however, there is less difference between common law and civilian systems than these general statements might lead one to suppose. The principles upon which English judges exercise the discretion to grant specific performance are reasonably well settled and depend upon a number of considerations, mostly of a practical nature, which are of very general application. I have made no 253
Sourcebook on Obligations and Remedies investigation of civilian systems, but a priori I would expect that judges take much the same matters into account in deciding whether specific performance would be inappropriate in a particular case… … A principal reason [for regarding constant supervision as undesirable] is that…the only means available to the court to enforce its order is the quasicriminal procedure of punishment for contempt. This is a powerful weapon; so powerful, in fact, as often to be unsuitable as an instrument for adjudicating upon the disputes which may arise over whether a business is being run in accordance with the terms of the court’s order. The heavy-handed nature of the enforcement mechanism is a consideration which may go to the exercise of the court’s discretion in other cases as well, but its use to compel the running of a business is perhaps the paradigm case of its disadvantages and it is in this context that I shall discuss them. The prospect of committal or even a fine, with the damage to commercial reputation which will be caused by a finding of contempt of court, is likely to have at least two undesirable consequences. First, the defendant, who ex hypothesi did not think that it was in his economic interest to run the business at all, now has to make decisions under a sword of Damocles which may descend if the way the business is run does not conform to the terms of the order. This is, as one might say, no way to run a business. In this case the Court of Appeal made light of the point because it assumed that, once the defendant had been ordered to run the business, self-interest and compliance with the order would thereafter go hand in hand. But, as I shall explain, this is not necessarily true. Secondly, the seriousness of a finding of contempt for the defendant means that any application to enforce the order is likely to be a heavy and expensive piece of litigation. The possibility of repeated applications over a period of time means that, in comparison with a once-and-for-all inquiry as to damages, the enforcement of the remedy is likely to be expensive in terms of cost to the parties and the resources of the judicial system. This is a convenient point at which to distinguish between orders which require a defendant to carry on an activity, such as running a business over or more or less extended period of time, and orders which require him to achieve a result. The possibility of repeated applications for rulings on compliance with the order which arises in the former case does not exist to anything like the same extent in the latter. Even if the achievement of the result is a complicated matter which will take some time, the court, if called upon to rule, only has to examine the finished work and say whether it complies with the order… This distinction between orders to carry on activities and to achieve results explains why the courts have in appropriate circumstances ordered specific performance of building contracts and repairing covenants... It by no means follows, however, that even obligations to achieve a result will always be enforced by specific performance... There is a further objection to an order requiring the defendant to carry on a business, which was emphasised by Millett LJ in the Court of Appeal. This is that it may cause injustice by allowing the plaintiff to enrich himself at the defendant’s expense. The loss which the defendant may suffer through having to comply with the order (for example, by running a business at a 254
Remedies loss for an indefinite period) may be far greater than the plaintiff would suffer from the contract being broken. As Professor RJ Sharpe explains in ‘Specific relief for contract breach’, in Reiter and Swan (eds), Studies in Contract Law, 1980, p 129: In such circumstances, a specific decree in favour of the plaintiff will put him in a bargaining position vis à vis the defendant whereby the measure of what he will receive will be the value to the defendant of being released from performance. If the plaintiff bargains effectively, the amount he will set will exceed the value to him of performance and will approach the cost to the defendant to complete. This was the reason given by Lord Westbury LC in Isenberg v East India House Estate Co Ltd (1863) 3 De GJ & S 263, p 273, for refusing a mandatory injunction to compel the defendant to pull down part of a new building which interfered with the plaintiff’s light and exercising instead the Court of Chancery’s recently acquired jurisdiction under Lord Cairns’s Act 1858 to order payment of damages… It is true that the defendant has, by his own breach of contract, put himself in such an unfortunate position. But the purpose of the law of contract is not to punish wrongdoing but to satisfy the expectations of the party entitled to performance. A remedy which enables him to secure, in money terms, more than the performance due to him is unjust. From a wider perspective, it cannot be in the public interest for the courts to require someone to carry on business at a loss if there is any plausible alternative by which the other party can be given compensation. It is not only a waste of resources but yokes the parties together in a continuing hostile relationship. The order for specific performance prolongs the battle. If the defendant is ordered to run a business, its conduct becomes the subject of a flow of complaints, solicitors’ letters and affidavits. This is wasteful for both parties and the legal system. An award of damages, on the other hand, brings the litigation to an end. The defendant pays damages, the forensic link between them is severed, they go their separate ways and the wounds of conflict can heal. The cumulative effect of these various reasons, none of which would necessarily be sufficient on its own, seems to me to show that the settled practice is based upon sound sense. Of course, the grant or refusal of specific performance remains a matter for the judge’s discretion. There are no binding rules, but this does not mean that there cannot be settled principles, founded upon practical considerations of the kind which I have discussed, which do not have to be re-examined in every case, but which the courts will apply in all but exceptional circumstances… CIS argued that the court should not be concerned about future difficulties which might arise in connection with the enforcement of the order. It should simply make the order and see what happened… I think that it is normally undesirable for judges to make orders in terrorem, carrying a threat of imprisonment, which work only if no one inquires too closely into what they mean.
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Sourcebook on Obligations and Remedies … Both landlord and tenant in this case are large sophisticated commercial organisations and I have no doubt that both were perfectly aware that the remedy for breach of the covenant was likely to be limited to an award of damages. The interests of both were purely financial: there was no element of personal breach of faith, as in the Victorian cases of railway companies which refused to honour obligations to build stations for landowners whose property they had taken: compare Greene v West Cheshire Railway Co (1871) LR 13 Eq 44. No doubt there was an effect on the businesses of other traders in the centre, but Argyll had made no promises to them and it is not suggested that CIS warranted to other tenants that Argyll would remain. Their departure, with or without the consent of CIS, was a commercial risk which the tenants were able to deploy in negotiations for the next rent review. On the scale of broken promises, I can think of worse cases, but the language of the Court of Appeal left them with few adjectives to spare… [The other Law Lords agreed with Lord Hoffmann.]
Questions 1 2 3
Are there special rules for commercial contractors? Did the defendants make a promise to the local community? Should they not have been estopped in equity from going back on this promise? ‘When money talks people whisper’ (graffiti in Swiss Cottage, London, 1970s). Discuss in relation to the law of remedies.
8 RESCISSION IN EQUITY Barclays Bank plc v O’Brien [1994] 1 AC 180 House of Lords This was an action by a bank for possession of a matrimonial home which had been used as security for an overdraft extended to a company in which the husband, but not the wife, had an interest. The wife resisted the possession action on the ground that she signed the charge documents in reliance on her husband’s false representation that it was limited to £60,000. The Court of Appeal held that the wife was entitled to special protection in equity and that the charge was enforceable against her only to the extent of £60,000. The House of Lords, although not agreeing with the special protection in equity, dismissed an appeal. Lord Browne-Wilkinson: My Lords, in this appeal your Lordships for the first time have to consider a problem which has given rise to reported decisions of the Court of Appeal on no less than 11 occasions in the last eight years and which has led to a difference of judicial view. Shortly stated the question is whether a bank is entitled to enforce against a wife an obligation to secure a debt owed by her husband to the bank where the wife has been induced to stand as surety for her husband’s debt by the undue influence or misrepresentation of the husband…
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Remedies The decision of the Court of Appeal The Court of Appeal (Purchas, Butler-Sloss and Scott LJJ) reversed [the trial judge’s order for possession]. The leading judgment in the Court of Appeal was given by Scott LJ, who found that there were two lines of authority. One line would afford no special protection to married women; the rights of the creditor bank could only be adversely affected by the wrongful acts of the principal debtor, the husband, in procuring the surety’s liability if the principal debtor was acting as the agent of the creditor in procuring the surety to join or the creditor had knowledge of the relevant facts. I will call this theory ‘the agency theory’. The other line of authority detected by Scott LJ (which I will call ‘the special equity theory’) considers that equity affords special protection to a protected class of surety, viz, those where the relationship between the debtor and the surety is such that influence by the debtor over the surety and reliance by the surety on the debtor are natural features of the relationship. In cases where a surety is one of this protected class, the surety obligation is unenforceable by the creditor bank if (1) the relationship between the debtor and the surety was known to the creditor; (2) the surety’s consent was obtained by undue influence or by misrepresentation or without ‘an adequate understanding of the nature and effect of the transaction’; and (3) the creditor had failed to take reasonable steps to ensure that the surety had given a true and informed consent to the transaction. The Court of Appeal preferred the special equity principle. They held that the legal charge on the O’Brien’s matrimonial home was not enforceable by the bank against Mrs O’Brien save to the extent of the £60,000 which she had thought she was agreeing to secure. Policy considerations The large number of cases of this type coming before the courts in recent years reflects the rapid changes in social attitudes and the distribution of wealth which have recently occurred. Wealth is now more widely spread. Moreover, a high proportion of privately owned wealth is invested in the matrimonial home. Because of the recognition by society of the equality of the sexes, the majority of matrimonial homes are now in the joint names of both spouses. Therefore in order to raise finance for the business enterprises of one or other of the spouses, the jointly owned home has become a main source of security. The provision of such security requires the consent of both spouses. In parallel with these financial developments, society’s recognition of the equality of the sexes has led to a rejection of the concept that the wife is subservient to the husband in the management of the family’s finances. A number of the authorities reflect an unwillingness in the court to perpetuate law based on this outmoded concept. Yet, as Scott LJ in the Court of Appeal rightly points out [1993] QB 109, p 139, although the concept of the ignorant wife leaving all financial decisions to the husband is outmoded, the practice does not yet coincide with the ideal. In a substantial proportion of marriages it is still the husband who has the business experience and the wife is willing to follow his advice without bringing a truly independent mind and will to bear on financial decisions. The number of recent cases in this field shows that in practice many wives are still subjected to, and yield to, undue influence by their husbands. Such wives can reasonably look to the law for some protection when their husbands have abused the trust and confidence reposed in them. 257
Sourcebook on Obligations and Remedies On the other hand, it is important to keep a sense of balance in approaching these cases. It is easy to allow sympathy for the wife who is threatened with the loss of her home at the suit of a rich bank to obscure an important public interest, viz, the need to ensure that the wealth currently tied up in the matrimonial home does not become economically sterile. If the rights secured to wives by the law renders vulnerable loans granted on the security of matrimonial homes, institutions will be unwilling to accept such security, thereby reducing the flow of loan capital to business enterprises. It is therefore essential that a law designed to protect the vulnerable does not render the matrimonial home unacceptable as security to financial institutions. With these policy considerations in mind I turn to consider the existing state of the law. The whole of modern law is derived from the decision of the Privy Council in Turnbull and Co v Duval [1902] AC 429 which, as I will seek to demonstrate, provides an uncertain foundation. Before considering that case however, I must consider the law of undue influence which (though not directly applicable in the present case) underlies both Duval’s case and most of the later authorities. Undue influence A person who has been induced to enter into a transaction by the undue influence of another (‘the wrongdoer’) is entitled to set that transaction aside as against the wrongdoer. Such undue influence is either actual or presumed. In Bank of Credit and Commerce International SA v Aboody [1990] 1 QB 923, p 953, the Court of Appeal helpfully adopted the following classification. Class 1: actual undue influence In these cases it is necessary for the claimant to prove affirmatively that the wrongdoer exerted undue influence on the complainant to enter into the particular transaction which is impugned. Class 2: presumed undue influence In these cases the complainant only has to show, in the first instance, that there was a relationship of trust and confidence between the complainant and the wrongdoer of such a nature that it is fair to presume that the wrongdoer abused that relationship in procuring the complainant to enter into the impugned transaction. In Class 2 cases, therefore, there is no need to produce evidence that actual undue influence was exerted in relation to the particular transaction impugned: once a confidential relationship has been proved, the burden then shifts to the wrongdoer to prove that the complainant entered into the impugned transaction freely, for example by showing that the complainant had independent advice. Such a confidential relationship can be established in two ways, viz: Class 2(A) Certain relationships (for example, solicitor and client, medical advisor and patient) as a matter of law raise the presumption that undue influence has been exercised.
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Remedies Class 2(B) Even if there is no relationship falling within Class 2(A), if the complainant proves the de facto existence of a relationship under which the complainant generally reposed trust and confidence in the wrongdoer, the existence of such relationship raises the presumption of undue influence. In a Class 2(B) case therefore, in the absence of evidence disproving undue influence, the complainant will succeed in setting aside the impugned transaction merely by proof that the complainant reposed trust and confidence in the wrongdoer without having to prove that the wrongdoer exerted actual undue influence or otherwise abused such trust and confidence in relation to the particular transaction impugned. As to dispositions by a wife in favour of her husband, the law for long remained in an unsettled state. In the 19th century, some judges took the view that the relationship was such that it fell into Class 2(A), that is, as a matter of law undue influence by the husband over the wife was presumed. It was not until the decisions in Howes v Bishop [1909] 2 KB 390 and Bank of Montreal v Stuart [1911] AC 120 that it was finally determined that the relationship of husband and wife did not as a matter of law raise a presumption of undue influence within Class 2(A). It is to be noted therefore that when the Duval case was decided in 1902 the question whether there was a Class 2(A) presumption of undue influence as between husband and wife was still unresolved. An invalidating tendency? Although there is no Class 2(A) presumption of undue influence as between husband and wife, it should be emphasised that in any particular case a wife may well be able to demonstrate that de facto she did leave decisions on financial affairs to her husband thereby bringing herself within Class 2(B), that is, that the relationship between husband and wife in the particular case was such that the wife reposed confidence and trust in her husband in relation to their financial affairs and therefore undue influence is to be presumed. Thus, in those cases which still occur where the wife relies in all financial matters on her husband and simply does what he suggests, a presumption of undue influence within Class 2(B) can be established solely from the proof of such trust and confidence without proof of actual undue influence… In my judgment [the] special tenderness of treatment afforded to wives by the courts is properly attributable to two factors. First, many cases may well fall into the Class 2(B) category of undue influence because the wife demonstrates that she placed trust and confidence in her husband in relation to her financial affairs and therefore raises a presumption of undue influence. Second, the sexual and emotional ties between the parties provide a ready weapon for undue influence: a wife’s true wishes can easily be overborne because of her fear of destroying or damaging the wider relationship between her and her husband if she opposes his wishes. For myself, I accept that the risk of undue influence affecting a voluntary disposition by a wife in favour of a husband is greater than in the ordinary run of cases where no sexual or emotional ties affect the free exercise of the individual’s will.
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Sourcebook on Obligations and Remedies Undue influence, misrepresentation and third parties Up to this point I have been considering the right of a claimant wife to set aside a transaction as against the wrongdoing husband when the transaction has been procured by his undue influence. But in surety cases the decisive question is whether the claimant wife can set aside the transaction, not against the wrongdoing husband, but against the creditor bank. Of course, if the wrongdoing husband is acting as agent for the creditor bank in obtaining the surety from the wife, the creditor will be fixed with the wrongdoing of its own agent and the surety contract can be set aside as against the creditor. Apart from this, if the creditor bank has notice, actual or constructive, of the undue influence exercised by the husband (and consequentially of the wife’s equity to set aside the transaction) the creditor will take subject to that equity and the wife can set aside the transaction against the creditor (albeit a purchaser for value) as well as against the husband: see Bainbrigge v Browne (1881) 18 Ch D 188 and Bank of Credit and Commerce International SA v Aboody [1990] 1 QB 923, p 973. Similarly, in cases such as the present where the wife has been induced to enter into the transaction by the husband’s misrepresentation, her equity to set aside the transaction will be enforceable against the creditor if either the husband was acting as the creditor’s agent or the creditor had actual or constructive notice. Turnbull and Co v Duval [1902] AC 429 This case provides the foundation of the modern law: the basis on which it was decided is, to say the least, obscure… [His Lordship considered Duval and subsequent authorities and concluded…] Accordingly, the present law is built on the unsure foundations of the Duval case. Like most law founded on obscure and possibly mistaken foundations, it has developed in an artificial way, giving rise to artificial distinctions and conflicting decisions. In my judgment your Lordships should seek to restate the law in a form which is principled, reflects the current requirements of society and provides as much certainty as possible. Conclusions (a) Wives My starting point is to clarify the basis of the law. Should wives (and perhaps others) be accorded special rights in relation to surety transactions by the recognition of a special equity applicable only to such persons engaged in such transactions? Or should they enjoy only the same protection as they would enjoy in relation to their other dealings? In my judgment, the special equity theory should be rejected. First, I can find no basis in principle for affording special protection to a limited class in relation to one type of transaction only. Second, to require the creditor to prove knowledge and understanding by the wife in all cases is to reintroduce by the back door either a presumption of undue influence of Class 2(A) (which has been decisively rejected) or the Romilly heresy (which has long been treated as bad law). Third, although Scott LJ found that there were two lines of cases one of which supported the special equity theory, on analysis although many decisions are not inconsistent with that theory the only two cases which
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Remedies support it are Yerkey v Jones 63 CLR 649, and the decision of the Court of Appeal in the present case. Finally, it is not necessary to have recourse to a special equity theory for the proper protection of the legitimate interests of wives as I will seek to show. In my judgment, if the doctrine of notice is properly applied, there is no need for the introduction of a special equity in these types of cases. A wife who has been induced to stand as a surety for her husband’s debts by his undue influence, misrepresentation or some other legal wrong has an equity as against him to set aside that transaction. Under the ordinary principles of equity, her right to set aside that transaction will be enforceable against third parties (for example, against a creditor) if either the husband was acting as the third party’s agent or the third party had actual or constructive notice of the facts giving rise to her equity. Although there may be cases where, without artificiality, it can properly be held that the husband was acting as the agent of the creditor in procuring the wife to stand as surety, such cases will be of very rare occurrence. The key to the problem is to identify the circumstances in which the creditor will be taken to have had notice of the wife’s equity to set aside the transaction. The doctrine of notice lies at the heart of equity. Given that there are two innocent parties, each enjoying rights, the earlier right prevails against the later right if the acquirer of the later right knows of the earlier right (actual notice) or would have discovered it had he taken proper steps (constructive notice). In particular, if the party asserting that he takes free of the earlier rights of another knows of certain facts which put him on inquiry as to the possible existence of the rights of that other and he fails to make such inquiry or take such other steps as are reasonable to verify whether such earlier right does or does not exist, he will have constructive notice of the earlier right and take subject to it. Therefore where a wife has agreed to stand surety for her husband’s debts as a result of undue influence or misrepresentation, the creditor will take subject to the wife’s equity to set aside the transaction if the circumstances are such as to put the creditor on inquiry as to the circumstances in which she agreed to stand surety… What, then, are the reasonable steps which the creditor should take to ensure that it does not have constructive notice of the wife’s rights, if any? Normally the reasonable steps necessary to avoid being fixed with constructive notice consist of making inquiry of the person who may have the earlier right (that is, the wife) to see whether such right is asserted. It is plainly impossible to require of banks and other financial institutions that they should inquire of one spouse whether he or she has been unduly influenced or misled by the other. But in my judgment, the creditor, in order to avoid being fixed with constructive notice, can reasonably be expected to take steps to bring home to the wife the risk she is running by standing as surety and to advise her to take independent advice. As to past transactions, it will depend on the facts of each case whether the steps taken by the creditor satisfy this test. However, for the future, in my judgment, a creditor will have satisfied these requirements if it insists that the wife attend a private meeting (in the absence of the husband) with a representative of the creditor at which she is told of the extent of her liability as surety, warned of the risk she is running and urged to take independent legal advice. If these steps are taken, in my
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Sourcebook on Obligations and Remedies judgment, the creditor will have taken such reasonable steps as are necessary to preclude a subsequent claim that it had constructive notice of the wife’s rights. I should make it clear that I have been considering the ordinary case where the creditor knows only that the wife is to stand surety for her husband’s debts. I would not exclude exceptional cases where a creditor has knowledge of further facts which render the presence of undue influence not only possible but probable. In such cases, the creditor to be safe will have to insist that the wife is separately advised… If the law is established as I have suggested, it will hold the balance fairly between on the one hand the vulnerability of the wife who relies implicitly on her husband and, on the other hand, the practical problems of financial institutions asked to accept a secured or unsecured surety obligation from the wife for her husband’s debts. In the context of suretyship, the wife will not have any right to disown her obligations just because subsequently she proves that she did not fully understand the transaction: she will, as in all other areas of her affairs, be bound by her obligations unless her husband has, by misrepresentation, undue influence or other wrong, committed an actionable wrong against her. In the normal case, a financial institution will be able to lend with confidence in reliance on the wife’s surety obligation provided that it warns her (in the absence of the husband) of the amount of her potential liability and of the risk of standing surety and advises her to take independent advice. Mr Jarvis, for the bank, urged that this is to impose too heavy a burden on financial institutions. I am not impressed by this submission. The Report by Professor Jack’s Review Committee on Banking Services: Law and Practice, Cmnd 622, 1989, recommended that prospective guarantors should be adequately warned of the legal effects and possible consequences of their guarantee and of the importance of receiving independent advice. Pursuant to this recommendation, the Code of Banking Practice (adopted by banks and building societies in March 1992) provides in paragraph 12.1 as follows: ‘Banks and building societies will advise private individuals proposing to give them a guarantee or other security for another person’s liabilities that: (i) by giving the guarantee or third party security he or she might become liable instead of or as well as that other person; (ii) he or she should seek independent legal advice before entering into the guarantee or third party security. Guarantees and other third party security forms will contain a clear and prominent notice to the above effect.’ Thus, good banking practice (which applies to all guarantees, not only those given by a wife) largely accords with what I consider the law should require when a wife is offered as surety. The only further substantial step required by law beyond that good practice is that the position should be explained by the bank to the wife in a personal interview. I regard this as being essential because a number of the decided cases show that written warnings are often not read and are sometimes intercepted by the husband. It does not seem to me that the requirement of a personal interview imposes such an additional administrative burden as to render the bank’s position unworkable.
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Remedies (b) Other persons I have hitherto dealt only with the position where a wife stands surety for her husband’s debts. But in my judgment the same principles are applicable to all other cases where there is an emotional relationship between cohabitees. The ‘tenderness’ shown by the law to married women is not based on the marriage ceremony but reflects the underlying risk of one cohabitee exploiting the emotional involvement and trust of the other. Now that unmarried cohabitation, whether heterosexual or homosexual, is widespread in our society, the law should recognise this. Legal wives are not the only group which are now exposed to the emotional pressure of cohabitation. Therefore if, but only if, the creditor is aware that the surety is cohabiting with the principal debtor, in my judgment the same principles should apply to them as apply to husband and wife. In addition to the cases of cohabitees, the decision of the Court of Appeal in Avon Finance Co Ltd v Bridger [1985] 2 All ER 281 shows (rightly in my view),that other relationships can give rise to a similar result. In that case a son, by means of misrepresentation, persuaded his elderly parents to stand surety for his debts. The surety obligation was held to be unenforceable by the creditor inter alia because to the bank’s knowledge the parents trusted the son in their financial dealings. In my judgment, that case was rightly decided: in a case where the creditor is aware that the surety reposes trust and confidence in the principal debtor in relation to his financial affairs, the creditor is put on inquiry in just the same way as it is in relation to husband and wife. Summary I can therefore summarise my views as follows. Where one cohabitee has entered into an obligation to stand as surety for the debts of the other cohabitee and the creditor is aware that they are cohabitees: (1) the surety obligation will be valid and enforceable by the creditor unless the suretyship was procured by the undue influence, misrepresentation or other legal wrong of the principal debtor; (2) if there has been undue influence, misrepresentation or other legal wrong by the principal debtor, unless the creditor has taken reasonable steps to satisfy himself that the surety entered into the obligation freely and in knowledge of the true facts, the creditor will be unable to enforce the surety obligation because he will be fixed with constructive notice of the surety’s right to set aside the transaction; (3) unless there are special exceptional circumstances, a creditor will have taken such reasonable steps to avoid being fixed with constructive notice if the creditor warns the surety (at a meeting not attended by the principal debtor) of the amount of her potential liability and of the risks involved and advises the surety to take independent legal advice. I should make it clear that in referring to the husband’s debts I include the debts of a company in which the husband (but not the wife) has a direct financial interest. The decision of this case Applying those principles to this case, to the knowledge of the bank Mr and Mrs O’Brien were man and wife. The bank took a surety obligation from Mrs O’Brien, secured on the matrimonial home, to secure the debts of a company 263
Sourcebook on Obligations and Remedies in which Mr O’Brien was interested but in which Mrs O’Brien had no direct pecuniary interest. The bank should therefore have been put on inquiry as to the circumstances in which Mrs O’Brien had agreed to stand as surety for the debt of her husband. If the Burnham branch had properly carried out the instructions from Mr Tucker of the Woolwich branch, Mrs O’Brien would have been informed that she and the matrimonial home were potentially liable for the debts of a company which had an existing liability of £107,000 and which was to be afforded an overdraft facility of £135,000. If she had been told this, it would have counteracted Mr O’Brien’s misrepresentation that the liability was limited to £60,000 and would last for only three weeks. In addition according to the side letter she would have been recommended to take independent legal advice. Unfortunately, Mr Tucker’s instructions were not followed and to the knowledge of the bank (through the clerk at the Burnham branch) Mrs O’Brien signed the documents without any warning of the risks or any recommendation to take legal advice. In the circumstances the bank (having failed to take reasonable steps) is fixed with constructive notice of the wrongful misrepresentation made by Mr O’Brien to Mrs O’Brien. Mrs O’Brien is therefore entitled as against the bank to set aside the legal charge on the matrimonial home securing her husband’s liability to the bank. For these reasons I would dismiss the appeal with costs.
Questions 1
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‘A person who has been induced to enter into a transaction by the undue influence of another (‘the wrongdoer’) is entitled to set that transaction aside as against the wrongdoer. Such undue influence is either actual or presumed’ (Lord Browne-Wilkinson). Can one commercial corporation be guilty of undue influence over another commercial corporation? ‘Equity in this jurisdiction acts upon the conscience of the creditor. In coming to the conclusion whether it would be unconscionable for the creditor to enforce the charge against the surety, all the circumstances involving the relationships between the creditor, the debtor and the surety will be taken into account” (Purchas LJ in the Court of Appeal [1992] 3 WLR 593, p 624). Does this mean that the equitable remedy of rescission is not governed by specific rules as such? Is Barclays Bank v O’Brien a policy decision? If so, what is the policy? ‘Now that unmarried cohabitation, whether heterosexual or homosexual, is widespread in our society, the law should recognise this’. Does the law actually treat a homosexual couple living together in the same way as it treats a heterosexual couple? (Cf Fitzpatrick v Sterling Housing Association Ltd [1998] Ch 304.) Redgrave v Hurd (1881) 20 Ch D 1 Court of Appeal (See p 476.) 264
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Is Redgrave authority for the proposition that contributory negligence is never a defence against fraudulent misrepresentation? Is it a defence against negligent misrepresentation? What if the defendant had not actually counterclaimed for rescission? Could the court have refused the plaintiffs action for specific performance on the basis that the contract was voidable at the defendant’s option (that is, without going to court)? William Sindall plc v Cambridgeshire CC [1994] 1 WLR 1016 Court of Appeal (See p 484.)
Notes and Questions 1
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In my judgment…a voluntary transaction…will be set aside for mistake whether the mistake is a mistake of law or fact, so long as the mistake is as to the effect of the transaction itself and not merely as to its consequences or the advantages to be gained by entering into it. The proposition that equity will never relieve against mistakes of law is clearly too widely stated…’ (Millet J in Gibbon v Mitchell [1990] 1 WLR 1304, p 1309). How would one distinguish between the ‘effect’ and the ‘consequences’ of, say, an earthquake? Why have legal systems traditionally distinguished between mistakes of law and mistakes of fact? Is rescission for mistake governed by rules? Read Gibbon v Mitchell [1990] 1 WLR 1304 in the law report. Would this case have survived an appeal?
9 RECTIFICATION IN EQUITY Thomas Bates and Son Ltd v Wyndham’s (Lingerie) Ltd [1981] 1 WLR 505 Court of Appeal This was an action by a landlord for rectification of a lease which, to the knowledge of the tenant, did not actually reflect what had been agreed between them during negotiations. The Court of Appeal held that the lease should be rectified. Buckley LJ:… The landlords claim rectification in the present case on the basis of a principle enunciated by Pennycuick J in A Roberts and Co Ltd v Leicestershire Council [1961] Ch 555, p 570, where he said: The second ground rests upon the principle that a party is entitled to rectification of a contract upon proof that he believed a particular term to be included in the contract, and that the other party concluded the contract
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Sourcebook on Obligations and Remedies with the omission or a variation of that term in the knowledge that the first party believed the term to be included… The principle is stated in Snell on Equity, 25th edn, 1960, p 569, as follows: ‘By what appears to be a species of equitable estoppel, if one party to a transaction knows that the instrument contains a mistake in his favour but does nothing to correct it, he (and those claiming under him) will be precluded from resisting rectification on the ground that the mistake is unilateral and not common.’ Of course, if a document is executed in circumstances in which one party realises that in some respect it does not accurately reflect what down to that moment had been the common intention of the parties, it cannot be said that the document is executed under a common mistake, because the party who has realised the mistake is no longer labouring under the mistake. There may be cases in which the principle enunciated by Pennycuick J applies although there is no prior common intention, but we are not, I think, concerned with such a case here, for it seems to me, upon the facts that I have travelled through, that it is established that the parties had a common intention down to the time when Mr Avon realised the mistake in the terms of the lease, a common intention that the rent in respect of any period after the first five years should be agreed or, in default of agreement, fixed by an arbitrator. The principle so enunciated by Pennycuick J was referred to, with approval, in this court in Riverlate Properties Ltd v Paul [1975] Ch 133, where Russell LJ, reading the judgment of the court, said, p 140: It may be that the original conception of reformation of an instrument by rectification was based solely upon common mistake: but certainly in these days rectification may be based upon such knowledge on the part of the lessee: see, for example, A Roberts and Co Ltd v Leicestershire County Council [1961] Ch 555. Whether there was in any particular case knowledge of the intention and mistake of the other party must be a question of fact to be decided upon the evidence. Basically it appears to us that it must be such as to involve the lessee in a degree of sharp practice. In that case the lessee against whom the lessor sought to rectify a lease was held to have had no such knowledge as would have brought the doctrine into play. The reference to ‘sharp practice’ may thus be said to have been an obiter dictum. Undoubtedly I think in any such case the conduct of the defendant must be such as to make it inequitable that he should be allowed to object to the rectification of the document. If this necessarily implies some measure of ‘sharp practice’, so be it; but for my part I think that the doctrine is one which depends more upon the equity of the position. The graver the character of the conduct involved, no doubt the heavier the burden of proof may be; but, in my view, the conduct must be such as to affect the conscience of the party who has suppressed the fact that he has recognised the presence of a mistake. For this doctrine—that is to say the doctrine of A Roberts and Co Ltd v Leicestershire County Council—to apply I think it must be shown: first, that one party A erroneously believed that the document sought to be rectified contained a particular term or provision, or possibly did not contain a particular term or provision which, mistakenly, it did contain; secondly, 266
Remedies that the other party B was aware of the omission or the inclusion and that it was due to a mistake on the part of A; thirdly, that B has omitted to draw the mistake to the notice of A. And I think there must be a fourth element involved, namely, that the mistake must be one calculated to benefit B. If these requirements are satisfied, the court may regard it as inequitable to allow B to resist rectification to give effect to A’s intention on the ground that the mistake was not, at the time of execution of the document, a mutual mistake… For these reasons I think that the judge…reached the right conclusion on the matter relating to rectification. I would accordingly uphold that part of his order which directed rectification…
Questions 1 2 3
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Is rectification a form of estoppel? Is Wyndham an unjust enrichment case? What is actually meant by ‘the equity of the position’? Is this something that is entirely bound up with the conduct of the parties? Or might the nature of the transaction be a consideration? Is the remedy of rectification governed by rules? The equitable remedy of rectification…is only one aspect of a much wider equitable jurisdiction to relieve from the consequences of mistake’ (Millett J in Gibbon v Mitchell [1990] 1 WLR 1304, p 1307). If a claimant sues only for rectification, could the court nevertheless grant rescission if it thought fit?
10 ACCOUNT London, Chatham and Dover Railway Co v South Eastern Railway Co [1892] 1 Ch 120 Court of Appeal Lindley LJ:… Before the Judicature Acts a suit for an account could be maintained in equity in the following cases: (1) Where the plaintiff had a legal right to have money payable to him ascertained and paid, but which right, owing to defective legal machinery, he could not practically enforce at law. Suits for an account between principal and agent, and between partners, are familiar instances of this class of case. (2) Where the plaintiff would have had a legal right to have money ascertained and paid to him by the defendant, if the defendant had not wrongfully prevented such right from accruing to the plaintiff. In such a case a court of law could only give unliquidated damages for the defendant’s wrongful act; and there was often no machinery for satisfactorily ascertaining what would have been due and payable if the defendant had acted properly. In such a case, however, a Court of Equity decreed an account, ascertained what would have been payable if the defendant had acted as he ought to have done and ordered him to pay the amount: M’Intosh v Great Western Railway Company (1865) 4 Giff 683 is the leading authority in this class of case. (3) Where the plaintiff had no legal but only equitable rights against the defendant, and where an account was 267
Sourcebook on Obligations and Remedies necessary to give effect to those equitable rights. Ordinary suits by cestuis que trust against their trustees and suits for equitable waste fell within this class. (4) Combination of the above cases. AG v Guardian Newspapers (No 2) [1990] AC 109 House of Lords Lord Goff:… The statement that a man shall not be allowed to profit from his own wrong is in very general terms, and does not of itself provide any sure guidance to the solution of a problem in any particular case. That there are groups of cases in which a man is not allowed to profit from his own wrong, is certainly true… The plaintiff’s claim to restitution is usually enforced by an account of profits made by the defendant through his wrong at the plaintiffs expense. This remedy of an account is alternative to the remedy of damages… English v Dedham Vale Properties [1978] 1 All ER 382 Chancery Division (See p 83.)
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What is the relationship between an action in debt and an action in account? Could the plaintiff in English law have sued in common law debt (money had and received) for the profit? If not, why not? Read the case of Cuckmere Brick Co v Mutual Finance Ltd [1971] Ch 949 in the law report. Was this an action in account? If not, what kind of action was it (assuming that equity does not have its own damages remedy)? Must there always be a fiduciary relationship before account will lie? Is account a remedy or a procedural process? What is the relationship, if any, between account and tracing in equity?
11 SUBROGATION Orakpo v Manson Investments Ltd [1978] AC 95 House of Lords Lord Diplock:… My Lords, there is no general doctrine of unjust enrichment recognised in English law. What it does is to provide specific remedies in particular cases of what might be classified as unjust enrichment in a legal system that is based on the civil law. There are some circumstances in which the remedy takes the form of ‘subrogation’, but this expression embraces more than a single concept in English law. It is a convenient way of describing a transfer of rights from one person to another, without assignment or assent of the person from whom the rights are transferred and which takes place by operation of law in a whole variety of widely different circumstances. Some rights by subrogation are contractual in their origin, as in the case of contracts of insurance. Others, such as the right of an innocent lender to recover from a company moneys borrowed ultra vires to the extent that these have been expended on discharging the company’s lawful debts, are in no way based
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Remedies on contract and appear to defeat classification except as an empirical remedy to prevent a particular kind of unjust enrichment. This makes particularly perilous any attempt to rely on analogy to justify applying to one set of circumstances which would otherwise result in unjust enrichment a remedy of subrogation which has been held to be available for that purpose in another and different set of circumstances. One of the sets of circumstances in which a right of subrogation arises is when a liability of a borrower B to an existing creditor C secured on the property of B is discharged out of moneys provided by the lender L and paid to C either by L himself at B’s request and on B’s behalf or directly by B pursuant to his agreement with L. In these circumstances L is prima facie entitled to be treated as if he were the transferee of the benefit of C’s security on the property to the extent that the moneys lent by L to B were applied to the discharge of B’s liability to C. This subrogation of L to the security on the property of B is based on the presumed mutual intentions of L and B; in other words where a contract of loan provides that moneys lent by L to B are to be applied in discharging a liability of B to C secured on property, it is an implied term of that contract that L is to be subrogated to C’s security… Lord Salmon:… The test whether the courts will apply the doctrine of subrogation to the facts of any particular case is entirely empirical. It is, I think, impossible to formulate any narrower principle than that the doctrine will be applied only when the courts are satisfied that reason and justice demand that it should be. Typical cases in which the doctrine has been held to apply are, for example, (1) A is insured against damage done to his car; his car is damaged in a collision with another car driven by Y; the insurers pay for the repair to A’s car and are subrogated to any rights which A may have against Y for causing the damage by negligence. The right to subrogation may be stipulated for in the insurance policy; but if it is not, it will be implied by the law. (2) When A, acting as B’s agent, pays out of his own pocket at B’s request, the price of the land which B has contracted to buy from V, and V thereupon conveys the land to B. The law will subrogate to A the rights which V had over the land after the contract of sale and before completion… Boscawen v Bajwa [1995] 4 All ER 769 Court of Appeal (See also p 244.) Millett LJ:… Subrogation…is a remedy, not a cause of action (see Goff and Jones, Law of Restitution, 4th edn, 1993, pp 589ff; Orakpo v Manson Investments Ltd [1978] AC 95, p 104, per Lord Diplock; and Re TH Knitwear (Wholesale) Ltd [1988] Ch 275, p 284 per Slade LJ). It is available in a wide variety of different factual situations in which it is required in order to reverse the defendant’s unjust enrichment. Equity lawyers speak of a right of subrogation, or of an equity of subrogation, but this merely reflects the fact that it is not a remedy which the court has a general discretion to impose whenever it thinks it just to do so. The equity arises from the conduct of the parties on well settled principles and in defined circumstances which make it unconscionable for the defendant to deny the proprietary interest claimed by the plaintiff. A constructive trust arises in the same way. Once the equity is established the 269
Sourcebook on Obligations and Remedies court satisfies it by declaring that the property in question is subject to a charge by way of subrogation in the one case or a constructive trust in the other…
Notes and questions 1
2 3 4
5
6
Subrogation is best understood as an institutional structure rather than as a remedy defined and governed by rules. It concerns the relationship between persona (legal subject) and res (legal object) and is a means by which one legal object (res) is substituted for another legal object (real subrogation) or one legal subject (persona) is substituted for another legal subject (personal subrogation). It was probably imported into the common law from the civil law, although it is part and parcel of the institutional scheme as developed by the Romans (see above, p 27). Subrogation plays a central role in the English law of obligations, since it is the means by which an insurance company is able to gain access to the courts: thus in Dorset Yacht (p 645) and Lister (p 534) the real plaintiff was an insurance company subrogated to the rights of the plaintiff. Can such a remedy defeat the loss spreading policy of the law of obligations? Is it still true to say that there is no doctrine of unjust enrichment in English law? (Cf Chapter 8.) Does the remedy of subrogation ever defeat the aims of unjust enrichment? (Cf Lister v Romford Ice Co, p 534.) To what extent is the idea of retention of title in supply of goods contracts dependent upon a form of subrogation? (Cf Aluminium Industrie Vaasen BV v Romalpa Aluminium Ltd [1976] 2 All ER 552.) Should subrogation in insurance be governed by principles from the common law (contract) or by principles from equity? (Cf Morris v Ford Motor Co [1973] 1 QB 792.) Was Photo Production v Securicor (p 552) a subrogation case? If so, did the existence of subrogation radically affect the outcome of the litigation?
12 INJUNCTION (a) The nature of an injunction Wookey v Wookey [1991] 3 WLR 135 Court of Appeal Butler-Sloss LJ:… The grant of an injunction is a discretionary remedy derived from the equitable jurisdiction which acts in personam and only against those who are amenable to its jurisdiction; nor will it act in vain by granting an injunction which is idle and ineffectual. An injunction should not, therefore, be granted to impose an obligation to do something which is impossible or cannot be enforced. The injunction must serve a useful purpose for the person seeking the relief and there must be a real possibility that the order, if made, 270
Remedies will be enforceable by the process in personam. However, the courts expect and assume that their orders will be obeyed and will not normally refuse an injunction because of the respondent’s likely disobedience to the order.
Notes and questions 1
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‘It is obvious…that there may be orders of the court which are not injunctions. The direction as to the removal of the children is such an order. It is neither an injunction nor in the nature of an injunction’ (Lloyd LJ in In re P (Minors) [1990] 1 WLR 613, p 615). What is so special about an injunction, and why is it different from other orders? The High Court may by order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to the court to be just and convenient to do so’ (Supreme Court Act 1981, s 37(1)). Does this statutory rule allow a court to issue an injunction in every case where they think it ‘just and convenient’ to do so? Can injunctions ever bind those who are not parties to the litigation? If so, does this mean that they do act in rem? In what circumstances will a court issue an injunction to prevent breaches of the criminal law? In what ways can injunctions be used to develop the law? Can they be used in ways that are not available to other remedies, such as debt, damages and rescission?
(b) Interlocutory injunction (interim orders) American Cyanamid Co v Ethicon Ltd [1975] AC 396 House of Lords Lord Diplock:… The object of the interlocutory injunction is to protect the plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial; but the plaintiffs need for such protection must be weighed against the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated under the plaintiffs undertaking in damages… The court must weigh one need against another and determine where ‘the balance of convenience’ lies… The court, no doubt, must be satisfied that the claim is not frivolous or vexatious; in other words, that there is a serious question to be tried… It is no part of the court’s function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature considerations. These are matters to be dealt with at the trial… So, unless the material available to the court at the hearing of the application for an interlocutory injunction fails to disclose 271
Sourcebook on Obligations and Remedies that the plaintiff has any real prospect of succeeding in his claim for a permanent injunction at the trial, the court should go on to consider whether the balance of convenience lies in favour of granting or refusing the interlocutory relief that is sought. As to that, the governing principle is that the court should first consider whether if the plaintiff were to succeed at the trial in establishing his right to a permanent injunction he would be adequately compensated by an award of damages for the loss he would have sustained as a result of the defendant’s continuing to do what was sought to be enjoined between the time of the application and the time of the trial. If the damages...would be adequate... no interlocutory injunction should normally be granted… It is where there is doubt as to the adequacy of the respective remedies in damages available to either party or to both, that the question of balance of convenience arises. It would be unwise to attempt even to list all the various matters which may need to be taken into consideration in deciding where the balance lies, let alone to suggest the relative weight to be attached to them. These will vary from case to case… The court is not justified in embarking on anything resembling a trial of the action…
Questions 1 2
Is an interlocutory injunction (interim order) a discretionary remedy that bears little relationship to the substantive rights of the parties? An employer seeks an interlocutory injunction against a trade union or group of employees in respect of a threatened strike: is the ‘balance of convenience’ question a matter of political judgment? Whose ‘convenience’ is to be considered? Allen v Jambo Holdings Ltd [1980] 2 All ER 502 Court of Appeal Lord Denning MR:… It is a new case altogether. In the past, Mareva injunctions have been confined to the commercial court. The judges of that court have granted injunctions to restrain foreign companies from removing moneys so as to defeat their creditors… But this is new. Not because it concerns an aircraft. There was one case where an aircraft ran up a bill for fuel. Its bill was not paid. The aircraft was restrained from moving until it was paid. But this is the first case we have had of a personal injury (this is a fatal accident case) where a Mareva injunction has been sought. The nearest parallel is a ship in an English port where there is an accident causing personal injuries or death. It has been settled for centuries that the claimant can bring an action in rent and arrest the ship. She is not allowed to leave the port until security is provided so as to ensure that any proper claim will be duly met. The question in this case is whether a similar jurisdiction can be exercised in regard to an aircraft. In principle I see no reason why it should not, except that it is to be done by a Mareva injunction instead of an action in rem…
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Remedies Mercedes Benz AG v Leiduck [1996] 1 AC 284 Privy Council (See p 219.) Lord Mustill:… Ideally…the first step would be to ascertain, not only what a Mareva injunction does, but also how, juristically speaking, it does it. This should be straightforward, but is not. After only a few years the development of a settled rationale was truncated by the enactment of s 37(3) of the Supreme Court Act 1981. This did not, as is sometime said, turn the common law Mareva injunction into a statutory remedy, but it assumed that the remedy existed, and tacitly endorsed its validity. An all-out challenge to the entire concept, such as may be found in Meagher, Gummow and Lehane, Equity Doctrines and Remedies, 3rd edn, 1992, pp 607–08, para 2186, seems a rather unlikely event, at least in the courts of England and Hong Kong. The remedy is now 20 years old and the problems, of which there is no lack, are of a practical kind; how to frame an order which, on the one hand, protects the claimant against the manipulations of a defendant who may prove to be unscrupulous, without strangling the working capital of a defendant at the instance of a claimant who may prove to be unscrupulous… These problems did not arise in the early days of the injunction, where the remedy was given only in the clearest of cases, but they have been increasing ever since. Amidst all the burdensome practicalities theory has been left behind. The only rationalisations which can be found in the cases are as follows. First, that although Mareva relief takes the shape of an injunction it is really a kind of attachment… This explanation cannot, their Lordships believe, be sustained in the light of the subsequent practical development of the regime… Moreover, it is now quite clear that Mareva relief takes effect in personam alone; it is not an attachment; it gives the claimant no proprietary rights in the assets seized, and no advantage over other creditors of the defendant… The courts administering the remedy always distinguish sharply between tracing and other remedies available where the plaintiff asserts that the assets in question belong to him and that the dealings with them should be enjoined in order to protect his proprietary rights, and Mareva injunctions granted where the plaintiff does not claim any interest in the assets and seeks an inhibition of dealings with them simply in order to keep them available for a possible future execution to satisfy an unconnected claim. The second rationalisation was advanced in the earlier case of Mareva Compania Naviera SA v International Bulkcarriers SA [1975] 2 Lloyd’s Rep 509, the appeal heard ex parte from which the remedy draws its popular name. Lord Denning MR accepted a narrow view of the power to grant injunctive relief…to the effect that, notwithstanding its apparent width, s 25(8) of the Judicature Act 1873, the predecessor of the present s 37 of the Act of 1981, did not confer an unlimited jurisdiction to grant an injunction regardless of the existence of a legal or equitable right which the injunction was designed to protect. He went on to hold, however, that even this restricted jurisdiction could found injunctive relief, since the plaintiff had a right to be paid the debt owing to him, even before he had established his right by getting judgment for it, in the action which was already afoot in England…
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Sourcebook on Obligations and Remedies There is, however, a problem with this explanation, for not only in The Siskina [1979] AC 210 but also in the subsequent decisions of the House of Lords…it was laid down that the statement of Cotton LJ in the North London Railway case, 11 QBD 30, was right and that the wider interpretation of the statutory power is not. On the face of it this would appear to negative the only surviving basis for the jurisdiction, unless the Mareva injunction is…a special exception to the general law. Further than this it is at present impossible to go, at least so far as concerns the law of England and Hong Kong. The most that can be said is that whatever its precise status the Mareva injunction is a quite different kind of injunction from any other…
Notes and questions 1
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‘If it appears that the debt is due and owing, and there is a danger that the debtor may dispose of his assets so as to defeat it before judgment, the court has jurisdiction in a proper case to grant an interlocutory judgment so as to prevent him disposing of those assets’ (Lord Denning MR in Mareva Compania Naviera v International Bulkcarriers [1980] 1 All ER 213, p 215). Does this mean that the interlocutory injunction is, in substance if not in form, a remedy in rem? How does the law enforce such an injunction? There are two particular kinds of interlocutory injunction of the utmost importance to English commercial law: (a) the Mareva injunction (above) (freezing injunction); and (b) the Anton Piller order (below) (search order). Are these examples of the creativity of the common law? Could the civil law judges ever have developed such remedies? Would civil law judges want to develop such remedies? Does the power to issue interlocutory remedies in civil law systems attach to the remedy or to the judge? Anton Piller KG v Manufacturing Processes Ltd [1976] 1 All ER 779 Court of Appeal Lord Denning MR:… Let me say at once that no court in this land has any power to issue a search warrant to enter a man’s house so as to see if there are papers or documents there which are of an incriminating nature… But the order sought in this case is not a search warrant. It does not authorise the plaintiffs’ solicitors or anyone else to enter the defendants’ premises against their will. It does not authorise the breaking down of any doors, nor the slipping in by the back door, nor getting in by an open door or window. It only authorises entry and inspection by the permission of the defendants. The plaintiffs must get the defendants’ permission. But it does do this: it brings pressure on the defendants to give permission. It does more. It actually orders them to give permission—with, I suppose, the result that if they do not give permission, they are guilty of contempt of court. Ormrod LJ:… The proposed order is at the extremity of this court’s powers. Such orders, therefore, will rarely be made… There are three essential 274
Remedies preconditions for the making of such an order, in my judgment. First, there must be an extremely strong prima facie case. Secondly, the damage, potential or actual, must be very serious for the plaintiff. Thirdly, there must be clear evidence that the defendants have in their possession incriminating documents or things, and that there is a real possibility that they may destroy such material before any application inter partes can be made. The form of the order makes it plain that the court is not ordering or granting anything equivalent to a search warrant. The order is an order on the defendant in personam to permit inspection. It is therefore open to him to refuse to comply with such an order, but at his peril either of further proceedings for contempt of court…but more important, of course, the refusal to comply may be the most damning evidence against the defendant at the subsequent trial…
Questions 1 2
Were the judges being realistic when they said that such orders would only rarely be made? Do you think Anton Piller (search) orders belong in the category of private or public law? Columbia Picture Industries Inc v Robinson [1987] Ch 38 Chancery Division Scott J:… It is implicit in the nature of Anton Piller orders that they should be applied for ex parte and dealt with by the courts in secrecy. In the Queen’s Bench Division applications…are heard in chambers. Secrecy is ensured. In this division applications are heard in court but it is customary for the court to sit in camera… [T]he most significant feature of Anton Piller orders is that they are mandatory in form and are designed for immediate execution… It is a fundamental principle of civil jurisprudence in this country that citizens are not to be deprived of their property by judicial or quasi-judicial order without a fair hearing. Audi alterem partem is one of the principles of natural justice and contemplates a hearing at which the defendant can, if so advised, be represented and heard… What is to be said of the Anton Piller procedure which, on a regular and institutionalised basis, is depriving citizens of their property and closing down their businesses by orders made ex parte, on applications of which they know nothing and at which they cannot be heard, by orders which are forced, on pain of committal, to obey, even if wrongly made?… It is the experience of [the solicitors acting for plaintiffs] that, when they apply for Anton Piller orders, they almost invariably succeed in getting them…
Questions 1
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Would it be unreasonable to say that legal remedies tend to be available for the convenience of commerce rather than the convenience of the citizen? If the UK had had a written constitution, together with a constitutional court, would Anton Piller (search) orders have ever been allowed?
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Sourcebook on Obligations and Remedies Lock plc v Beswick [1989] 1 WLR 1268 Chancery Division Hoffmann J:… Even in cases in which the plaintiff has strong evidence that an employee has taken what is undoubtedly specific confidential information, such as a list of customers, the court must employ a graduated response. To borrow a useful concept from the jurisprudence of the European Community, there must be proportionality between the perceived threat to the plaintiffs rights and the remedy granted. The fact that there is overwhelming evidence that the defendant has behaved wrongfully in his commercial relationships does not necessarily justify an Anton Piller order… The making of an intrusive order ex parte even against a guilty defendant is contrary to normal principles of justice and can only be done when there is a paramount need to prevent a denial of justice to the plaintiff. The absolute extremity of the court’s powers is to permit a search of a defendant’s dwelling house, with the humiliation and family distress which that frequently involves.
Questions 1
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Ought the principle of proportionality to be applicable to all types of interlocutory (interim) injunctions? Do you think, in substance, it is a principle that the English courts have always tried to apply? Does it apply to remedies other than injunctions? Is the interlocutory (interim) injunction a remedy that is sometimes difficult to reconcile with the idea of human rights? Or is it a remedy that supports human rights? Should interlocutory injunctions ever be available to inhibit publication of a true story whose publication might be in the public interest?
(c) The role of injunctions Warner Brothers Pictures Inc v Nelson [1937] 1 KB 209 King’s Bench Branson J: The facts of this case are few and simple. The plaintiffs are a firm of film producers in the United States of America. In 1931, the defendant [Bette Davis], then not well known as a film actress, entered into a contract with the plaintiffs. Before the expiration of that contract the present contract was entered into between the parties. Under it the defendant received a considerably enhanced salary, the other conditions being substantially the same. This contract was for 52 weeks and contains options to the plaintiffs to extend it for further periods of 52 weeks at ever-increasing amounts of salary to the defendant… It is a stringent contract, under which the defendant agrees ‘to render her exclusive services as a motion picture and/or legitimate stage actress’ to the plaintiffs, and agrees to perform solely and exclusively for them. She also agrees, by way of negative stipulation, that ‘she will not, during such time’—that is to say, during the term of the contract—‘render any services for or in any other phonographic, stage or motion picture production…or engage in any other occupation without the written consent of the producer…’.
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Remedies In June of this year, the defendant, for no discoverable reason except that she wanted more money, declined to be further bound by the agreement, left the United States and, in September, entered into an agreement in this country with a third person. This was a breach of contract on her part, and the plaintiffs …commenced this action claiming a declaration that the contract was valid and binding, an injunction to restrain the defendant from acting in breach of it, and damages… I turn then to the consideration of the law applicable to this case on the basis that the contract is a valid and enforceable one. It is conceded that our courts will not enforce a positive covenant of personal service; and specific performance of the positive covenants by the defendant to serve the plaintiffs is not asked in the present case… The defendant, having broken her positive undertakings in the contract without any cause or excuse which she was prepared to support in the witness box, contends that she cannot be enjoined from breaking the negative covenants also… The conclusion to be drawn from the authorities is that, where a contract of personal service contains negative covenants the enforcement of which will not amount either to a decree of specific performance of the positive covenants of the contract or to the giving of a decree under which the defendant must either remain idle or perform those positive covenants, the court will enforce those negative covenants; but this is subject to a further consideration. An injunction is a discretionary remedy, and the court in granting it may limit it to what the court considers reasonable in all the circumstances of the case… The case before me is, therefore, one in which it would be proper to grant an injunction unless to do so would in the circumstances be tantamount to ordering the defendant to perform her contract or remain idle or unless damages would be the more appropriate remedy. With regard to the first of these considerations, it would, of course, be impossible to grant an injunction covering all the negative covenants in the contract. That would, indeed, force the defendant to perform her contract or remain idle; but this objection is removed by the restricted form in which the injunction is sought. It is confined to forbidding the defendant, without the consent of the plaintiffs, to render any services for or in any motion picture or stage production for any one other than the plaintiffs. It was also urged that the difference between what the defendant can earn as a film artiste and what she might expect to earn by any other form of activity is so great that she will in effect be driven to perform her contract. That is not the criterion adopted in any of the decided cases. The defendant is stated to be a person of intelligence, capacity and means, and no evidence was adduced to show that, if enjoined from doing the specified acts otherwise than for the plaintiffs, she will not be able to employ herself both usefully and remuneratively in other spheres of activity, though not as remuneratively as in her special line. She will not be driven, although she may be tempted, to perform the contract, and the fact that she may be so tempted is no objection to the grant of an injunction… I think…that an injunction should be granted… 277
Sourcebook on Obligations and Remedies Miller v Jackson [1977] QB 966 Court of Appeal (Seep 51.) Burris v Azadani [1995] 1 WLR1372 Court of Appeal Sir Thomas Bingham MR: Mr Behrooz Azadani, the appellant in this court, was the subject of an injunction granted in ordinary common law proceedings by the county court. One of the terms of that injunction was that he should not go within 250 yards of a specified address. He did so. The breach was proved and he was committed to prison. He submits on this appeal that the term in question was one which the judge was not entitled to impose or should not have imposed. He seeks to be released from prison on one or other of those grounds. Miss Burris is a divorced woman living with her two children, now aged about 10 and eight, in Mandrake Road, London, SW 17. In September 1992, she and her children began to attend classes in martial arts at the Balham Leisure Centre. Mr Azadani was one of their instructors and they became acquainted with him in that way. Mr Azadani sought a close and intimate relationship with Miss Burris. This was something she did not want and did her best to resist. Unfortunately, Mr Azadani was unwilling to respect her wishes. He made a number of uninvited visits to her house, often in the middle of the night, and refused to leave. He made nuisance telephone calls to her on repeated occasions. He made threats to commit suicide and threats against her. He also made threats to slash the tyres of her car, and the tyres of her car were thereafter slashed, although she cannot state positively that he was responsible. She was understandably very worried about the safety of her children and herself. It is unnecessary to recite the history which gave rise to the proceedings in detail, since there has been no dispute concerning Miss Burris’s account, which discloses an intolerable history of harassment and molestation. On 28 January 1994, Miss Burris applied ex parte to the district judge at Wandsworth County Court for grant of an interlocutory injunction. Her application was supported by an affidavit of the same date, exhibiting a summary of the history on which she relied. It is evident that the application was made in some haste, and no proceedings had at that stage been issued. On Miss Burris’s undertaking to file particulars of claim within seven days leave was given to issue a summons. An injunction was also granted... Section 38 of the County Courts Act 1984 provides: (1)
Subject to what follows, in any proceedings in a county court the court may make any order which could be made by the High Court if the proceedings were in the High Court.
The County Court Remedies Regulations 1991 SI 1991/1222 (L8) restrict the grant of Anton Piller orders and Mareva injunctions by county courts, but otherwise the power of the county court to grant an interlocutory injunction is the same as that of the High Court. The power of the High Court is found in s 37(1) of the Supreme Court Act 1981, which provides:
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The High Court may by order (whether interlocutory or final) grant an injunction…in all cases in which it appears to the court to be just and convenient to do so.
It is, of course, quite clear that the court cannot properly grant an injunction unless the plaintiff can show at least an arguable cause of action to support the grant, but subject to this overriding requirement s 37, as has often been observed, is cast in the widest terms. If an injunction may only properly be granted to restrain conduct which is in itself tortious or otherwise unlawful, that would be a conclusive objection to term (c) of the 28 January 1994 injunction, since it is plain that Mr Azadani would commit no tort nor otherwise act unlawfully if, without more, he were to traverse Mandrake Road without any contact or communication with Miss Burris, exercising his right to use the public highway peacefully in the same way as any other member of the public. I do not, however, think that the court’s power is so limited. A Mareva injunction granted in the familiar form restrains a defendant from acting in a way which is not, in itself, tortious or otherwise unlawful. The order is made to try and ensure that the procedures of the court are in practice effective to achieve their ends. The court recognises a need to protect the legitimate interests of those who have invoked its jurisdiction. [Sir Thomas referred to and discussed in detail Khorasandjian v Bush [1993] QB 727]… Neither statute nor authority in my view precludes the making of an ‘exclusion zone’ order. But that does not mean that such orders should be made at all readily, or without very good reason. There are two interests to be reconciled. One is that of the defendant. His liberty must be respected up to the point at which his conduct infringes, or threatens to infringe, the rights of the plaintiff. No restraint should be placed on him which is not judged to be necessary to protect the rights of the plaintiff. But the plaintiff has an interest which the court must be astute to protect. The rule of law requires that those whose rights are infringed should seek the aid of the court, and respect for the legal process can only suffer if those who need protection fail to get it. That, in part at least, is why disobedience to orders of the court has always earned severe punishment. Respect for the freedom of the aggressor should never lead the court to deny necessary protection to the victim. Ordinarily, the victim will be adequately protected by an injunction which restrains the tort which has been or is likely to be committed, whether trespass to the person or to land, interference with goods, harassment, intimidation or as the case may be. But it may be clear on the facts that if the defendant approaches the vicinity of the plaintiff’s home he will succumb to the temptation to enter it, or to abuse or harass the plaintiff; or that he may loiter outside the house, watching and besetting it, in a manner which might be highly stressful and disturbing to a plaintiff. In such a situation the court may properly judge that in the plaintiff’s interest—and also, but indirectly, the defendant’s—a wider measure of restraint is called for… Millett LJ: I agree.
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Sourcebook on Obligations and Remedies Schiemann LJ: I agree with the judgment delivered by Sir Thomas Bingham MR. As he points out, there are in these cases two interests to be reconciled that of the plaintiff not to be harassed and that of the defendant to be allowed to move freely along the highway. An exclusion zone order interferes with the latter in order to secure the former. On its face, it forbids what are lawful actions. The defendant has rendered himself liable to such an order because of his previous harassing behaviour. Nonetheless, a judge imposing such an order must be careful not to interfere with the defendant’s rights more than is necessary in order to protect the plaintiffs. I draw attention to the fact that in the present case we are dealing with an interlocutory not a final injunction. Moreover the injunction was granted ex parte with liberty to Mr Azadani to apply to discharge it. So, the interference with Mr Azadani’s liberty to use the highway was merely temporary and the judge left himself opportunity for reconsideration after having heard Mr Azadani. A judge faced with an application for a permanent injunction is faced with a different problem. As presently advised I consider that any such injunction should include a liberty to apply so that the defendant should not be precluded from exercising his normal rights if the fears which gave rise to the imposition of the injunction no longer have any basis in fact sufficient to justify its continuation.
Notes and questions 1
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‘I have before me an application by three plaintiffs for injunctions to restrain tower cranes erected and operated by the defendants from oversailing their respective properties…[Counsel for the plaintiff] has submitted that if I am satisfied, as I am, that the oversailing booms…are committing a trespass…the plaintiffs are entitled to an injunction as of course. An injunction is a discretionary remedy, but it is well settled that the discretion must be exercised in accordance with judicial precedent and principle and there is authority…that a trespass threatened to be continued will be restrained by injunction as of course. There is a sense in which the grant of an injunction against trespass enables a landowner to behave like a dog in a manger… But…[t]he authorities establish, in my view, that the plaintiffs are entitled as of course to injunctions…’ (Scott J in Anchor Brewhouse Developments v Berkley House [1987] EG 173). If the injunction is not available as of course, would this not make nonsense of any notion of ownership in English law? In Miller v Jackson, was the discretion exercised in accordance with judicial precedent? Can a court issue an injunction simply to protect the public interest? (Cf Thomas v NUM [1986] Ch 20; Associated British Ports v TGWU [1989] 1 WLR 939.) Do injunctions protect rights or interests?
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13 DECLARATION In re S (Hospital Patient: Court’s Jurisdiction) [1995] 3 WLR 78 Court of Appeal Sir Thomas Bingham MR:… This appeal concerns a gentleman named S. S is a Norwegian citizen, aged 76, and a man of considerable wealth. While in England in September 1993, he suffered a severe and disabling stroke. Underlying the present appeal is a substantial question: whether the best interests of S are served by his returning to Norway, to be cared for in a nursing home outside Oslo, or by his remaining in England, either at the private hospital in which he is now a patient or at some other suitable place. The first of these courses is strongly favoured by S’s wife and only son, the second and first defendants in these proceedings. The second course is strongly favoured by the plaintiff, a woman whose companionship and support S enjoyed in the years before his stroke. S himself is third defendant in the proceedings, represented by the Official Solicitor. I describe that issue as the substantial issue underlying these proceedings. It is not the issue now before the court. The sole issue now before us is a procedural question concerning the standing of the plaintiff to invoke the jurisdiction of the court to grant declaratory relief. This is an important question going to the jurisdiction of the court, for if the plaintiff has no standing to claim declaratory relief the court has no jurisdiction to grant it… The jurisdiction of the court to grant declaratory relief is not conferred, but is regulated, by RSC Ord 15 r 16 (replacing what had been Ord 25 r 5). The rule provides: No action or other proceeding shall be open to objection on the ground that a merely declaratory judgment or order is sought thereby, and the court may make binding declarations of right whether or not any consequential relief is or could be claimed. In Guaranty Trust Co of New York v Hannay and Co [1915] 2 KB 536, the defendants had sued the plaintiffs in the United States to recover an amount which the defendants had paid to the plaintiffs under a bill of exchange. The plaintiffs brought these proceedings in England against the defendants claiming a declaration that they were not bound to repay the sum which they had received. The defendants applied to strike out the proceedings for want of jurisdiction. This application found favour with Buckley LJ on the ground, p 548, that no declaration or injunction could be granted unless it were founded upon alleged facts showing (if true) a cause of action by the plaintiff against the defendant… The jurisdiction of the court to grant declaratory relief in private law proceedings was squarely raised in In re F (Mental Patient: Sterilisation) [1990] 2 AC 1. The issue in the case concerned the lawfulness of an operation to sterilise an adult but mentally handicapped woman. The woman herself, by her mother and next friend, applied to the court for a declaration that the operation would not be unlawful although performed without her consent. Despite doubts expressed by the Court of Appeal, the House of Lords was in no doubt that the procedure adopted was appropriate… 281
Sourcebook on Obligations and Remedies … It cannot of course be suggested that any stranger or officious busybody, however remotely connected with a patient or with the subject matter of proceedings, can properly seek or obtain declaratory or any other relief (in private law any more than public law proceedings). But it can be suggested that where a serious justiciable issue is brought before the court by a party with a genuine and legitimate interest in obtaining a decision against an adverse party the court will not impose nice tests to determine the precise legal standing of that claimant… I would dismiss the appeal of S’s wife and son and uphold the decision of the judge, very much for the reasons which she gave. Kennedy LJ:… I have read the judgments of Sir Thomas Bingham MR and Millett LJ. I agree the appeal should be dismissed for the reasons given. Millett LJ: This is not a case about medical treatment or the withdrawal of medical treatment, nor is it a case about the provision or withdrawal of care. It is in effect a custody dispute between two parties each of whom claims the right to look after an elderly gentleman (whom I will call ‘the patient’) in accordance with what each of them plausibly asserts he would wish if he were not by reason of incapacity unable to formulate or communicate his wishes. Formerly the court would have resolved the dispute by exercising its parens patriae jurisdiction, but as Lord Donaldson of Lymington MR pointed out in In re F (Mental Patient: Sterilisation) [1990] 2 AC 1, p 12, that jurisdiction was taken away from the courts in 1960, possibly in the mistaken belief that they had been given all the necessary powers by the Mental Health Act 1959. It is clear from the authorities (and was conceded before us) that the court would have jurisdiction to determine the dispute if the proceedings were brought by the patient himself acting by the Official Solicitor; or by the hospital authority seeking guidance from the court as to the course it should take. The circumstances of the case did not admit of the former course, and the hospital authority cannot be compelled to adopt the latter. It follows, however, that it is a case about the plaintiff’s standing, not about the court’s jurisdiction, save in the narrow sense that the court may be said to have no jurisdiction to grant relief to a person with no standing to seek it. The increasing number of elderly and incapacitated dependants who are unable to formulate and articulate their wishes but who are expected to be cared for in the community, and the growing number of persons who for one reason or another have more than one family wishing to undertake responsibility for them, mean that disputes of the present kind are likely to recur with increasing frequency. They are justiciable in proceedings brought by the proper party, yet unless the court is willing to entertain proceedings brought by the parties who claim the responsibility for looking after the patient it will often not be possible to bring proceedings at all. In such circumstances the parties are likely to resort to self-help. This would be a lamentable state of affairs and would in my judgment represent a serious abdication of responsibility by the court.
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Remedies On behalf of the patient’s wife and son it was argued that, in private law proceedings like the present, it is not sufficient for a party who asks the court to grant a declaration to demonstrate that he has a legitimate interest in obtaining it. He need not assert a cause of action, but he must have a legal right to obtain relief. There must, it was submitted, be some legal relationship between the parties giving rise to mutual rights and obligations capable of being the subject matter of the declaration sought. In the present case there is no legal relationship between the plaintiff on the one hand and the patient’s wife and son on the other. They have competing claims; but neither of them is asserting any legal right of its own. Each of them, no doubt for commendable reasons, wishes to undertake responsibility for the future welfare of the patient; and each of them may feel under a moral or social duty to assume such responsibility. But neither of them has any legal right or duty to do so; the legal right to choose where he should live and the nature and extent of his medical and other care is the right of the patient and no one else. The jurisdiction of the court to grant declaratory relief was considered in the well known case of Guaranty Trust Co of New York v Hannay and Co [1915] 2 KB 536. The majority of the court held that the court had jurisdiction to grant declaratory relief whether there was a cause of action or not. The actual scope of the decision was narrow, since the plaintiff was seeking no more than a declaration that it was not liable under a contract between it and the defendant, a course of proceedings which has since become a commonplace. But the judgments of the majority were couched in wide language. Pickford LJ considered that it was sufficient if the plaintiff was interested in the subject matter of the declaration (which I take to mean that he had a legal interest); and Bankes LJ considered that it was sufficient if the plaintiff was claiming relief, giving that word its fullest meaning. There is an inevitable circularity in these formulations, for the tendency of English law to view rights in terms of remedies makes it difficult to place limits on the right to a remedy which is available without a pre-existing cause of action. In Gouriet v Union of Post Office Workers [19781 AC 435, Lord Diplock said, p 501: Authorities about the jurisdiction of the courts to grant declaratory relief are legion. The power to grant a declaration is discretionary; it is a useful power and over the course of the last hundred years it has become more and more extensively used... Nothing that I have to say is intended to discourage the exercise of judicial discretion in favour of making declarations of right in cases where the jurisdiction to do so exists. But that there are limits to the jurisdiction is inherent in the nature of the relief: a declaration of rights. The only kinds of rights with which courts of justice are concerned are legal rights; and a court of civil jurisdiction is concerned with legal rights only when the aid of the court is invoked by one party claiming a right against another party, to protect or enforce the right or to provide a remedy against that other party for infringement of it, or is invoked by either party to settle a dispute between them as to the existence or nature of the right claimed. So for the court to have jurisdiction to declare any legal right it must be one which is claimed by one of the parties as enforceable against an adverse party to the litigation, either as a subsisting right or as one which may come into existence in the future conditionally 283
Sourcebook on Obligations and Remedies on the happening of an event… But the jurisdiction of the court is not to declare the law generally or to give advisory opinions; it is confined to declaring contested legal rights, subsisting or future, of the parties represented in the litigation before it and not of anyone else. Since that decision the courts have developed the jurisdiction to grant declaratory relief in a number of cases which, though distinguishable from the present, are nevertheless not altogether dissimilar to it. We have now reached a position where the court is prepared in an appropriate case to fill much of the lacuna left by the disappearance of the parens patriae jurisdiction by granting something approaching an advisory declaration. In my judgment, the passage which I have cited from Lord Diplock’s speech in the Gouriet case [1978] AC 435, p 501, can no longer be taken to be an exhaustive description of the circumstances in which declaratory relief can be granted today. It is to be regarded rather as a reminder that the jurisdiction is limited to the resolution of justiciable issues; that the only kind of rights with which the court is concerned are legal rights; and that accordingly there must be a real and present dispute between the parties as to the existence or extent of a legal right. Provided that the legal right in question is contested by the parties, however, and that each of them would be affected by the determination of the issue, I do not consider that the court should be astute to impose the further requirement that the legal right in question should be claimed by either of the parties to be a right which is vested in itself. The layman would, I think, be astonished to be told that the plaintiff had sufficient legal standing to set in motion the process of medical treatment which the patient’s condition required and to decide where he should be treated but lacked sufficient legal standing to set in motion the legal proceedings which later became necessary in order to decide where he should live. He would also be surprised to learn that, while the court had jurisdiction to decide that issue in proceedings brought by the patient himself joining the rival claimants as defendants, it had no jurisdiction to decide it in proceedings brought by either claimant joining the other claimant and the patient himself as defendants. He would conclude, inter alia, that the objection must be technical and procedural. If the patient were a sack of potatoes, instead of a living person unable by reason of incapacity of making his wishes known, the court would have undoubted jurisdiction to resolve any dispute between rival claimants. It would do so by resort to considerations of legal title and possession. Why should it make a difference that the subject matter of the dispute is the right to look after a human being, and that the resolution of the dispute depends upon ascertaining his wishes or, if they cannot be ascertained, by determining what is in his best interest and inferring that that is what he would wish? The answer given is that the so called right is not a legal right at all, but rather a social or moral duty; and that the only legal rights which are in question are rights which belong to the patient. If necessary, I would hold that a claim to be allowed without interference to look after an elderly and incapacitated relative or other person in accordance with his presumed wishes
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Remedies is a legal right which the court will recognise and protect, and not merely a moral or social obligation. But I do not think that it is necessary. The patient has a legal right to decide where and with whom he should live; he is incapable of making that decision or, if he can make it, of articulating it; there are two rival claimants each of whom wishes to care for him in accordance with his alleged wishes; and the court is asked to rule on which of them would be carrying out his wishes and which of them would be infringing his rights. The dispute raises a justiciable issue; it concerns the legal rights of the patient; all proper parties, including the patient, are before the court; and the determination of the issue affects the rival claimants and their rights and obligations to the patient. In my judgment the court is entitled and bound to decide it. I would dismiss the appeal.
Questions 1 2
Was S being treated more as a res than a persona? In these days of disappearing legal aid, would it be of value for Parliament to introduce a statutory procedure by which disputed points of law could easily be brought before the judiciary for a declaration (for example, with regard to duty of care)? On what grounds might the judges object to such a statutory reform?
14 DISCOVERY OF DOCUMENTS X Ltd v Morgan-Grampian (Publishers) Ltd [1991] 1 AC 1 House of Lords Lord Bridge: My Lords, the plaintiffs are two associated private companies whose anonymity it is essential to preserve if the proceedings they have brought are to serve their intended purpose. In 1989 the plaintiffs wished to raise additional capital and a number of their senior officers with the assistance of their accountants were engaged in preparing a corporate plan for submission to prospective lenders. Much of the information in the plan was in the highest degree confidential and, as Hoffmann J found, its publication pending the finalisation of the negotiations for the purpose of which it was being prepared would be likely to cause severe damage to the plaintiffs. This finding of fact has not been challenged. On 1 November 1989 there were eight numbered copies of the latest, but not yet final, draft of the plan in existence, each in a ring binder marked ‘strictly confidential.’ Between 3 pm and 4 pm on 1 November one copy was left in an unattended, unlocked room at the plaintiffs’ premises. During that time it disappeared. On the next day somebody, whom it is convenient to refer to as ‘the source’, telephoned to the third defendant, Mr Goodwin, who is a young trainee journalist employed by one or other of the defendant companies, the publishers of a weekly journal called The Engineer. I shall refer to these 285
Sourcebook on Obligations and Remedies defendants as ‘the publishers’. The source gave Mr Goodwin certain information about the plaintiffs. The nature of the information and the timing of the communication justify the inference that the source had obtained the information from the plan and was either the person who had stolen the missing copy or was closely associated with that person. Mr Goodwin was minded to write an article for The Engineer about the plaintiffs based in part on the information given to him by the source and in part on other information which he could obtain from publicly accessible sources. He telephoned to the plaintiffs and their bankers to check certain facts. He then drafted an article which was circulated for consideration by members of the publishers’ editorial staff. But before any decision was taken to publish, the plaintiffs, alerted by Mr Goodwin’s inquiries, obtained an ex parte injunction to restrain publication. When the matter came before Hoffmann J, inter partes, the plaintiffs sought not only injunctions against all the defendants to restrain publication but also orders for disclosure of the identity of the source and of the notes which Mr Goodwin had made of his conversation with the source as a means of discovering that identity. No issue arises regarding the injunctions. The outcome of several hearings between 14 and 22 November was that the publishers, who did not know the identity of the source, were ordered to disclose the notes but could not comply with the order because they had no means of coercing Mr Goodwin. By order dated 22 November, Mr Goodwin was ordered to disclose his notes to the plaintiffs by 3 pm on the following day, but later on 22 November the Court of Appeal (Lord Donaldson of Lymington MR, Ralph Gibson and McCowan LJJ) varied this order by giving Mr Goodwin the option of delivering his notes to the court in a sealed envelope which would remain sealed until final determination of Mr Goodwin’s appeal against the order. If the appeal was allowed, the envelope was to be returned to him unopened. Mr Goodwin failed to comply with the order. On 24 November the plaintiffs moved to commit him for contempt… Jurisdiction to order disclosure The first submission made on behalf of the defendants is that the court had no jurisdiction to order them to make discovery of Mr Goodwin’s notes. It is said that, since the sole purpose for which the plaintiffs seek the notes is to derive from them whatever assistance they may afford in identifying the source, Mr Goodwin and the publishers are in the position of mere witnesses who, though they might be compelled by subpoena to testify in proceedings instituted by the plaintiffs against either the source or the thief of the missing copy of the corporate plan, are not amenable to any process of discovery to assist the plaintiffs in advance of litigation against those parties. The short answer to this submission is that the defendants are already subject to the court’s jurisdiction as parties properly impleaded as defendants to claims for quid timet injunctions to restrain them from publishing information imparted to them in breach of confidence. In that capacity they are amenable to the full scope of the court’s wide power to order discovery inter partes. The notes are unquestionably discoverable for the purposes of the quia timet litigation. It is said that, in disclosing the notes for that purpose, the defendants 286
Remedies would be entitled to cover up any material which identified the source on the ground that it would be irrelevant to any issue in the quia timet litigation. But it is not until it is disclosed that the relevance of the material can be determined. The fact that the plaintiffs’ primary purpose in seeking to obtain disclosure of the notes is to identify the source does not in any way inhibit or restrict the court’s power to order discovery for the purposes of the quid timet litigation, subject always to any claim for privilege from disclosure which the defendants can establish. But if it were necessary to invoke the principle which enables the court, in certain circumstances, to order discovery by a party against whom the party seeking discovery has no cause of action, I have no doubt that the circumstances here bring the defendants within that principle. The principle was fully explored and expounded in Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133. It is shortly stated by Lord Reid in the following terms, p 175: [The authorities] seem to me to point to a very reasonable principle that if through no fault of his own a person gets mixed up in the tortious acts of others so as to facilitate their wrong-doing he may incur no personal liability but he comes under a duty to assist the person who has been wronged by giving him full information and disclosing the identity of the wrongdoers. In the Norwich case, the plaintiffs alleged that the Customs and Excise Commissioners were, in the exercise of their official duties, handling goods which infringed the plaintiffs’ patent and which were being illicitly imported into this country. They sought discovery of documents in the possession of the commissioners which would enable them to identify the importers. The commissioners resisted the claim. Although the commissioners had acted entirely innocently, they were required to make disclosure. Just as in the Norwich case the commissioners had innocently come into possession of goods tortiously imported, so here the defendants, whether innocently or not, came into possession of confidential information tortiously obtained and tortiously imparted to them. In the Norwich case, the commissioners had already delivered some infringing goods to the importer. The plaintiffs’ purpose in seeking discovery was to enable them to identify the importer and bring proceedings against him to restrain further infringing importations. Here the defendants were about to publish the confidential information and would have done so if not restrained by injunction. The plaintiffs here seek the identity of the source to enable them to take the necessary steps to protect themselves from other tortious dissemination of the confidential information which threatens to damage them so severely. It was submitted by Mr Robertson, on behalf of Mr Goodwin, that the jurisdiction to order discovery was not here available because the defendants had been successfully restrained from publishing the confidential information. I do not think this affects the applicability of the principle in any way. Just as the commissioners in the Norwich case were, in Lord Reid’s phrase, ‘mixed up’ in the tortious acts of others from the moment they received the infringing goods tortiously imported, so the defendants here were ‘mixed up’ in the tortious acts of the source from the moment that Mr Goodwin in the course of his employment
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Sourcebook on Obligations and Remedies by the publishers received the confidential information tortiously disclosed. The argument against jurisdiction wholly fails. Privilege from disclosure The courts have always recognised an important public interest in the free flow of information. How far and in what circumstances the maintenance of this public interest operated to confer on journalists any privilege from disclosure of their sources which the common law would recognise admitted of no short and simple answer on the authorities. But the matter is no longer governed by the common law and I do not think any assistance is to be gained from the authorities preceding the coming into force of s 10 of the Contempt of Court Act 1981 which is in these terms: No court may require a person to disclose, nor is any person guilty of contempt of court for refusing to disclose, the source of information contained in a publication for which he is responsible, unless it be established to the satisfaction of the court that disclosure is necessary in the interests of justice or national security or for the prevention of disorder or crime. It has been accepted in this case at all levels that the section applies to the circumstances of the instant case notwithstanding that the information obtained by Mr Goodwin from the source has not been ‘contained in a publication’… … It is, in my opinion, ‘in the interests of justice’, in the sense in which this phrase is used in s 10, that persons should be enabled to exercise important legal rights and to protect themselves from serious legal wrongs whether or not resort to legal proceedings in a court of law will be necessary to attain these objectives. Thus, to take a very obvious example, if an employer of a large staff is suffering grave damage from the activities of an unidentified disloyal servant, it is undoubtedly in the interests of justice that he should be able to identify him in order to terminate his contract of employment, notwithstanding that no legal proceedings may be necessary to achieve that end. Construing the phrase ‘in the interests of justice’ in this sense immediately emphasises the importance of the balancing exercise. It will not be sufficient, per se, for a party seeking disclosure of a source protected by s 10 to show merely that he will be unable without disclosure to exercise the legal right or avert the threatened legal wrong on which he bases his claim in order to establish the necessity of disclosure. The judge’s task will always be to weigh in the scales the importance of enabling the ends of justice to be attained in the circumstances of the particular case on the one hand against the importance of protecting the source on the other hand. In this balancing exercise it is only if the judge is satisfied that disclosure in the interests of justice is of such preponderating importance as to override the statutory privilege against disclosure that the threshold of necessity will be reached. Whether the necessity of disclosure in this sense is established is certainly a question of fact rather than an issue calling for the exercise of the judge’s 288
Remedies discretion, but, like many other questions of fact, such as the question whether somebody has acted reasonably in given circumstances, it will call for the exercise of a discriminating and sometimes difficult value judgment. In estimating the weight to be attached to the importance of disclosure in the interests of justice on the one hand and that of protection from disclosure in pursuance of the policy which underlies s 10, on the other hand, many factors will be relevant on both sides of the scale. It would be foolish to attempt to give comprehensive guidance as to how the balancing exercise should be carried out. But it may not be out of place to indicate the kind of factors which will require consideration. In estimating the importance to be given to the case in favour of disclosure there will be a wide spectrum within which the particular case must be located. If the party seeking disclosure shows, for example, that his very livelihood depends upon it, this will put the case near one end of the spectrum. If he shows no more than that what he seeks to protect is a minor interest in property, this will put the case at or near the other end. On the other side the importance of protecting a source from disclosure in pursuance of the policy underlying the statute will also vary within a wide spectrum. One important factor will be the nature of the information obtained from the source. The greater the legitimate public interest in the information which the source has given to the publisher or intended publisher, the greater will be the importance of protecting the source. But another and perhaps more significant factor which will very much affect the importance of protecting the source will be the manner in which the information was itself obtained by the source. If it appears to the court that the information was obtained legitimately this will enhance the importance of protecting the source. Conversely, if it appears that the information was obtained illegally, this will diminish the importance of protecting the source unless, of course, this factor is counterbalanced by a clear public interest in publication of the information, as in the classic case where the source has acted for the purpose of exposing iniquity. I draw attention to these considerations by way of illustration only and I emphasise once again that they are in no way intended to be read as a code. In the circumstances of the instant case, I have no doubt that Hoffmann J and the Court of Appeal were right in finding that the necessity for disclosure of Mr Goodwin’s notes in the interests of justice was established. The importance to the plaintiffs of obtaining disclosure lies in the threat of severe damage to their business, and consequentially to the livelihood of their employees, which would arise from disclosure of the information contained in their corporate plan while their refinancing negotiations are still continuing. This threat, accurately described by Lord Donaldson of Lymington MR [1990] 2 WLR 421, p 439, as ‘ticking away beneath them like a time bomb’ can only be defused if they can identify the source either as himself the thief of the stolen copy of the plan or as a means to lead to the identification of the thief and thus put themselves in a position to institute proceedings for the recovery of the missing document. The importance of protecting the source on the other hand is much diminished by the source’s complicity, at the very least, in a gross breach of confidentiality which is not counterbalanced by any legitimate interest which publication of the information was calculated to serve. Disclosure in the interests of justice is, on this view of the balance, clearly of preponderating importance so as to
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Sourcebook on Obligations and Remedies override the policy underlying the statutory protection of sources and the test of necessity for disclosure is satisfied… The maintenance of the rule of law is in every way as important in a free society as the democratic franchise. In our society the rule of law rests upon twin foundations: the sovereignty of the Queen in Parliament in making the law and the sovereignty of the Queen’s courts in interpreting and applying the law. While no one doubts the importance of protecting journalists’ sources, no one, I think, seriously advocates an absolute privilege against disclosure admitting of no exceptions. Since the enactment of s 10 of the Act of 1981 both the protection of journalists’ sources and the limited grounds on which it may exceptionally be necessary to override that protection have been laid down by Parliament. I have not heard of any campaign in the media suggesting that the law itself is unjust or that the exceptions to the protection are too widely drawn. But if there were such a campaign, it should be fought in a democratic society by persuasion, not by disobedience to the law. Given the law as laid down by s 10, who, if not the courts, is to interpret it and to decide in the circumstances of any given case whether the protection is to prevail or whether the case is brought within one of the exceptions? The journalist cannot be left to be judge in his own cause and decide whether or not to make disclosure. This would be an abdication of the role of Parliament and the courts in the matter and in practice would be tantamount to conferring an absolute privilege. Of course the courts, like other human institutions, are fallible and a journalist ordered to disclose his source may, like other disappointed litigants, feel that the court’s decision was wrong. But to contend that the individual litigant, be he a journalist or anyone else, has a right of ‘conscientious objection’ which entitles him to set himself above the law if he does not agree with the court’s decision, is a doctrine which directly undermines the rule of law and is wholly unacceptable in a democratic society. Any rule of professional conduct enjoining a journalist to protect his confidential sources must, impliedly if not expressly, be subject to whatever exception is necessary to enable the journalist to obey the orders of a court of competent jurisdiction. Freedom of speech is itself a right which is dependent on the rule of law for its protection and it is paradoxical that a serious challenge to the rule of law should be mounted by responsible journalists. I would dismiss the appeals of both the publishers and Mr Goodwin with costs. In view of his contempt I would order that the costs as against Mr Goodwin be taxed on an indemnity basis. Lord Templeman: My Lords, the publication of the information given by the source to Mr Goodwin would have done no good to anybody but would have been partly inaccurate, partly misleading and wholly injurious to the business of the plaintiffs and the interests of their creditors, shareholders and employees. The article drafted by Mr Goodwin was a mixture of information which was not confidential and had already been made available to the public and information derived from the source which Mr Goodwin had been unable to check and which he ought to have recognised as both confidential and damaging. The use of stolen material by the source was wholly irresponsible and either malicious or designed to forward the career of Mr Goodwin without regard to any damage thereby caused to the plaintiffs.
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Remedies It is necessary for the source to be revealed so that the plaintiffs can take steps to ensure that the source does not remain in the position in which he may by disclosing confidential information cause serious damage to the plaintiffs. There is not absolute immunity for a journalist to conceal his sources. Such an absolute immunity would enable the source or the journalist or both to make use of any untrue, misleading or confidential information with impunity. This means that the journalist is in a dilemma. He wishes to encourage disclosure but he cannot promise absolute immunity to his source unless the information reveals crime or some other iniquity. The journalist can only protect the source if the court decides that it is not necessary to protect the victim of the disclosure. Where, as in the present case, there is no question of iniquity or misconduct on the part of the plaintiffs, the journalist is not entitled to protect his source if the court decides that it is necessary to protect the plaintiff victims by enabling them to identify and disarm a proven and potential wrongdoer who has attempted and may again attempt to cause serious harm to the plaintiffs. Disclosure of the source in these circumstances seems to me to be necessary within s 10 of the Contempt of Court Act 1981 and necessary in the sense in which that word has been interpreted by the European Court of Human Rights… Lord Griffiths: My Lords, I have had the advantage of reading in draft the speeches of my noble and learned friends Lord Bridge of Harwich and Lord Oliver of Aylmerton. I agree with both of them and for the reasons which they have given I too would dismiss the appeals. Lord Oliver:… The detection of crime, the security of the State and the prevention of disorder are clearly and obviously all matters which affect the public. But the public equally has an interest in the maintenance of the rights of private citizens under the law which cannot reasonably be confined simply to the area of actual or contemplated proceedings. The interest of the public in the administration of justice must, in my opinion, embrace its interest in the maintenance of a system of law, within the framework of which every citizen has the ability and the freedom to exercise his legal right to remedy a wrong done to him or to prevent it being done, whether or not through the medium of legal proceedings. To deny to an employer engaged in proceedings to restrain a breach of confidence the opportunity to discover and proceed against a treacherous employee who is causing him loss and damage is no less a denial of justice because the employer is able, and may prefer in the event, to protect himself by the exercise of his legal right to terminate the contract of service rather than by civil proceedings in court or by prosecution. Whether the denial of that right is of such importance as to necessitate overriding the privilege of non-disclosure will depend on the facts of each case, including the magnitude of the damage or potential damage, the opportunities for repetition and so on. In the instant case, however, the potential damage to the plaintiffs’ business is very substantial and I see no reason for differing from the conclusion of Hoffmann J and the Court of Appeal that the importance to the plaintiffs of ensuring that further dissemination of the highly confidential material contained in the stolen document should be prevented rendered the discovery that he ordered ‘necessary in the interests of justice’. I accordingly agree that the appeals of
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Sourcebook on Obligations and Remedies both the publishers and Mr Goodwin should be dismissed and I concur in the order for costs which my noble and learned friend Lord Bridge of Harwich has proposed… Lord Lowry: My Lords, I have had the advantage of reading in draft the speech delivered by my noble and learned friend, Lord Bridge of Harwich. I agree with it in its entirety and, if I venture to add some observations of my own, it is because of the importance of the subjects canvassed before your Lordships in this appeal. As to the jurisdiction to order disclosure, the facts proved and admitted refute the contention (which, if justified, would have altered the position) that the publishers and Mr Goodwin were ‘mere witnesses’. I respectfully agree with the analysis of my noble and learned friend and would only remark that Mr Goodwin’s case not only is covered by Norwich Pharmacal Co v Customs and Excise Commissioners [1974] AC 133 but is a fortiori, because he and the source were joint tortfeasors… The defendants have contended that the section ought to receive a purposive construction so as to implement the admittedly important and well recognised public interest of protecting sources by strictly limiting the court’s power to order disclosure. An answer to this approach is: (1) that the words of the section are reasonably clear and ought therefore to be given their plain and natural meaning; and (2) that the argument fails to recognise the already strong tendency in favour of non-disclosure as compared with the pre-Act common law position: the section confers substantial protection (where, strictly speaking, there was none before) by enacting a complete prohibition against ordering disclosure unless the court is satisfied that disclosure is necessary in one of just four crucial areas. On the other hand, the words of s 10 itself show that Parliament has recognised and accepted other countervailing interests by virtue of which sources will on occasions have to be disclosed and accordingly has further accepted the fact that the adverse effects of disclosure on freedom of information must on those occasions be endured in deference to those other interests. Thus, within the narrow limits laid down by the section, Parliament contemplates that disclosure of a source may sometimes be more in the public interest than non-disclosure… I, too, would dismiss the appeals with costs and would order the costs as against Mr Goodwin to be taxed on an indemnity basis.
Questions 1
2
Is this case about the balancing of a public interest against a commercial interest? Given that most judges come from the commercial bar, is the decision surprising? There are references to the European Court of Human Rights. Do you think this court supported the decision of the House of Lords? (Cf Goodwin v UK (1996) 22 EHRR123.)
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3
Is this case still a good precedent? (Cf Camelot Group plc v Centaur Communications Ltd [1999] QB 124.) 4 Do these judgments conflict with the observations of Hoffmann LJ in the Central Television case (p 129)? 5 Ought one to be concerned about the English judiciary’s willingness or ability to protect hu
