News


St John’s Chambers welcomes new pupils

St John’s Chambers is very pleased to welcome new pupils Iain Large, Emma Price and Dr Rachel Segal.

iain-large-118Iain will be working within our family practice group, and will be supervised by Abigail Bond.  Iain was born and raised in the South West before reading History at Balliol College, Oxford and Harvard University. Turning to law, he spent two years setting up a Lottery-funded legal advice partnership in Exeter, while undertaking the GDL conversion course at the University of Plymouth. He currently also acts as a trustee of the South West Legal Support Trust.

Iain said “Having always wanted to practise in the South West, St John’s appealed to me in particular due to its large, well-regarded and experienced family team and its commitment to nurturing pupils within a specialist practice area. During pupillage I am looking forward to gaining experience across the whole range of family law and learning from the diverse field of experts in chambers.”

emma-price-116Emma will be working within our commercial and chancery practice group and will be supervised by James Pearce-Smith. Emma studied Law at the University of Bristol, followed by an LLM at UCL. Following her studies, and on completion of the BPTC, she spent two years working as a Law Reporter for the All England Reporter, which involved writing and editing digests of cases across all areas of law.  This provided an excellent opportunity to observe hearings, both at first instance and on appeal, and also to cover some of the most high-profile Supreme Court cases.

Emma said “I applied to St John’s because of the excellent reputation of the commercial and chancery practice group and, additionally, the opportunity to undertake a pupillage which focussed specifically on one practice group. I am looking forward to gaining experience of a broad range of commercial and chancery work, and to learning and developing my skills as much as possible.”

rachel-segal-128Rachel will be working within our personal injury  and clinical negligence practice groups and will be supervised by Head of our clinical negligence team, Vanessa McKinlay and Matthew White. Prior to embarking on training for the Bar Rachel was for several years a University Lecturer in Musicology (the academic study of music, encompassing analysis, philosophy, history, sociology, theory and criticism of music). Over time she became increasingly involved in Higher Education policy (Learning and Teaching) and associated research.  She then became a Senior Adviser in Pedagogic Practice and Policy with a portfolio of universities and conservatoires and went on to lead a national Research and Evaluation team in this diverse, highly politicised field. Over the past two years she was a freelance County Court Advocate working primarily on the North Eastern circuit where she enjoyed a diverse and busy caseload.  She represented claimants and defendants in numerous Stage 3 and infant settlement hearings, interim applications, CMC and CCMCs but also mortgage possessions and applications, insolvency proceedings, enforcement actions.

Rachel said “I am very much looking forward to learning from the abundance of talented members in Chambers – they really are quite remarkable. From day one I’ve been given an opportunity to get to grips with interesting and challenging cases in clinical negligence and personal injury.  It will be great to be in court and working again with clients when I am on my feet with my own caseload in second six. St John’s is quite simply a fantastic set.  I have always wanted to be a civil practitioner and so looked carefully for a prestigious mixed civil set outside of London with the very best advocates attracting really high quality work. St John’s Chambers is at the top of the rankings for my areas of practice and in so many more and I knew this would be a perfect environment in which to learn from a broad range of specialisms at a very high level.  It also has a great reputation for being a friendly but professional set for pupillage and my experience so far most certainly chimes with that perception. I am delighted and feel privileged to be here.”

For more information on pupillage at St John’s Chambers please visit our pupillage page here.

Competition and Markets Authority focuses on competition law compliance in the South West

Matthew O'ReganThe UK’s primary competition authority, the Competition and Markets Authority (CMA), has announced that it is writing to leading law firms throughout the South West asking them to help promote their clients’ awareness of competition law compliance, particularly amongst small and medium sized enterprises (SMEs).

The CMA is concerned that SMEs have little or no awareness of competition law, even though the consequences of breaching competition law (for example by participating in a cartel or fixing resale prices) can be severe both for businesses and individuals. These include heavy fines for businesses and, for individuals involved in illegal cartels, potentially long prison sentences. Businesses are also often unaware of what to do if they have infringed competition law or suspect that a competitor or supplier has done so, causing loss or damage to them.

The most common ways in which SMEs may infringe competition law include:

  • agreeing to fix prices or to share customers or markets between themselves;
  • bid-rigging, including cover-pricing and deciding who should ‘win’ a tender;
  • sharing confidential commercial information with each other.

Companies’ distribution arrangements may also restrict competition, for example by

  • fixing resale prices;
  • preventing retailers advertising their prices or discounts online;
  • stopping retailers from using online market platforms.

For more information visit the CMA website: Competition and Markets Authority 

St John’s Chambers’ Competition team, led by barrister Matthew O’Regan, advises on all aspects EU and UK competition law, including:

  • providing compliance training and developing compliance programmes;
  • advising on structuring commercial agreements (including distribution, agency and pricing agreements) and arrangements with competitors in order comply with competition law;
  • advising on what to do when anti-competitive conduct is suspected
    representing companies being investigated by the CMA and other competition authorities.

Matthew O’Regan has nearly 20 years’ experience as a specialist UK and EU competition lawyer, having originally practised as a solicitor in leading international and national law firms in London, Brussels and Bristol. He was called to the Bar and joined Chambers in 2015. He has extensive experience of cartel and other antitrust investigations and of advising on the application of competition law to a wide range of commercial agreements and business strategies.

If you should wish to discuss how Matthew O’Regan may be able to help you or your clients, please contact his clerks on .

Emma Zeb represents Bristol City Council at 5-day inquest into death of Robert Crane

Emma ZebInquest barrister Emma Zeb is representing Bristol City Council (Estates and Social Care Departments) at the 5-day inquest into the death of Robert Crane at Flax Bourton Coroner’s Court.

The article 2 inquest examines the circumstances surrounding the death of Mr Crane who died at a fire in his flat on 6th September 2014.

View profile: Emma Zeb

Visit BBC’s website for more information, by clicking here

Charlie Newington-Bridges successful in the Court of Appeal resisting an application for a second appeal in a case involving the construction of a land option

Charlie Newington-BridgesCharlie Newington-BridgesCommercial Dispute Resolution and Property barrister, instructed by Stephen Wray at Porter Dodson and acting for H&S Developments was successful in the Court of Appeal in resisting an application for a second appeal in the matter of H&S Developments v Chant [2016] EWCA Civ 848, a case involving the construction of a land option.

H&S Developments (‘H&S’), a development company, entered into an option agreement with Mrs Chant, a land owner, on 24 February 2010 by which it acquired an option to purchase land from her if ‘detailed planning permission’ were obtained in respect of the land by 23 February 2015. Accordingly, it was accepted by both parties that ‘detailed planning permission’ was a condition precedent for the exercise of the option. The issue was what that phrase meant. On 29 January 2014 planning permission in an outline form was granted by the Local Planning Authority. On 5 February 2014, H&S served its first notice exercising the option. Mrs Chant declined to transfer the land on the basis of that notice of call of option. In April 2014 H&S issued proceedings seeking specific performance and damages. On 19 December 2014 there was a determination by the Local Planning Authority to grant permission in respect of reserved matters in relation to the outline planning permission. On 13 January 2013 the Claimant served a second notice of call of option; this was done before the end of the option period.

The principal issue at first instance and on the first appeal was whether the outline planning permission obtained by H&S in January 2014 qualified as a planning permission according to the relevant definition in the option agreement i.e. ‘detailed planning permission’. Having considered Court of Appeal authority including Castlebay Limited v Asquith Properties Limited [2005] EWCA Civ 1734 in which Chadwick LJ held that ‘an application for approval of reserved matters is not an application for planning permission’, both the District Judge and the Circuit Judge came to the conclusion that ‘detailed planning permission’ did cover such planning permission as had been obtained in January 2014 and accordingly that the first notice of exercise of the option was valid and should have been complied with. HHJ Denyer QC also noted that the reserved matters left open by the outline planning permission had been resolved by the end of 2014 and before the second notice of call of option.

As the case was a second appeal the threshold test for granting permission to appeal was whether the appeal raised important points of principle or practice or there was some other compelling reason for the Court of Appeal to hear the second appeal: CPR 52.13(2).

The main submission made on behalf of Mrs Chant was that there was an important point of principle or practice involved in the case because the definition of planning permission in the option agreement was in a form which reflected a common precedent for a landowner’s option agreement. In his judgment Sales LJ, finding for H&S, held that there was no important point of principle or practice or other compelling reason to grant permission for a second appeal because the option agreement was a non-standard agreement, albeit it bore some similarity to a precedent to which he was referred. In any event, he reasoned that even if successful on the construction point it would amount to a Pyrrhic victory because the second notice of call of option would, even on the interpretation of the contract proposed by Mrs Chant, have been a valid exercise of the option rights under the option agreement because by that stage a detailed planning permission was in place, taking the outline planning permission in conjunction with the reserved matters approval of 19 December 2014. In practical effect, LJ said, the appeal would be academic. Accordingly, the application was dismissed and H&S were successful.

View judgment: H&S Developments v Chant [2016] EWCA Civ 848
View profile: Charlie Newington-Bridges

If you would like to discuss instructing Charlie, please contact his clerks on 0117 923 4740 or e-mail 

Family law barristers Lucy Reed and Sarah Phillimore to speak at Resolution seminar on the Ellie Butler case

Lucy ReedLucy Reed and Sarah Phillimore, members of our children’s team, and The Transparency Project will be speaking at the Resolution London Region Group’s lecture on lessons from the Ellie Butler case. This seminar will be taking place at Charles Russell Speechlys office in London on Monday, 3rd October.

Sarah PhillimoreLucy, recently shortlisted as ‘Barrister of the Year’ by Bristol Law Society and author of her blog Pink Tape, and Sarah, blogger at Child Protection Resource will be speaking alongside Andrew Pack, Lawyer and author of Suesspicious minds blog.

Lucy is Chair of the Transparency Project, a Charity whose aim is to encourage and facilitate debate, and to improve the understanding and functioning of the Family Justice System. The project has recently secured a substantial grant from the Legal Education Foundation. (See www.transparencyproject.org.uk), and Lucy and Sarah spend a considerable amount of time, along with other trustees and project members, correcting inaccurate press reporting, myth busting, explaining family law and family court process in an accessible way, and engaging with topical debates concerning family law.

If you would like to attend please click here.

View profiles: Lucy Reed / Sarah Phillimore

Bristol Law Society shortlist St John’s for ‘Chambers of the Year’ award

St John’s Chambers is delighted to announce that we have been shortlisted for ‘Chambers of the Year’ at the Bristol Law Society’s Annual Awards 2016, being one of three sets to be nominated. This clearly identifies Chambers continued commitment to the legal profession and wider community having won this award in 2015. For men

No implied obligation to exercise contractual right to terminate in good faith – Monde Petroleum SA v Westernzagros Ltd [2016] EWHC 1472 (Comm)

4In Monde Petroleum SA v Westernzagros Ltd [2016] EWHC 1472 (Comm) the High Court held that an express right to terminate a contract did not need to be exercised in good faith.

Facts

Westernzagros was negotiating with the Kurdistan government to search for oil in Kurdistan. Monde were assisting Westernzagros in those negotiations pursuant to a consulting contract (Monde was run by the son of a prominent Iraqi politician, giving it an advantage in such negotiations). Monde’s remuneration comprised monthly fees and the prospect of acquiring an option to take a 3% interest in the oil project itself, subject to certain conditions being satisfied.

In the event an agreement was reached with the Kurdistan government but the conditions for Monde’s 3% interest to arise were unlikely to be satisfied. Westernzagros then served notice to terminate the consulting contract pursuant to an express contractual power to do so. Monde argued that in doing so Westernzagros was acting in bad faith by depriving Monde of the chance to share in the profits of Westernzagros’ deal with the Kurdistan government.

Decision

The court held that there was no implied term of the consulting contract to the effect that Westnerzagros would not terminate it in bad faith. Richard Salter QC, sitting as a Deputy High Court Judge, held that the simple fact that a contract was long-term or “relational” was not sufficient to imply a duty of good faith. Further, he doubted whether an express contractual power to terminate would ever be subject to an implied restriction on its exercise in this manner. Provided that any conditions are satisfied, the exercising party is entitled to exercise that power without having to justify its actions.

In any event the judge found that Westernzagros had not acted in bad faith by terminating the consulting contract. Monde had very little prospect of triggering their 3% interest in the oil project itself. If Westernzagros could not terminate then they would have to keep paying Monde for little or nothing, while Monde’s chances of triggering that 3% interest would be slight.

Analysis

This is the latest of a series of recent decisions which apply the brakes to the gradual development of good faith in English contract law. The Court made clear that a duty of good faith is implied in certain categories of contract characterized by a fiduciary relationship, but would otherwise only arise where the contract would lack commercial or practical coherence without it. A distinction was also drawn between implied terms to act in good faith in the performance of a contract and a term concerned with termination. In the latter case a contractual right to terminate can be exercised irrespective of the reasons for doing so (applying Lomas v JFB Firth Rixon [2012] EWCA Civ 419).

“…a contractual right to terminate is a right which may be exercised irrespective of the exercising party’s reasons for doing so.”
Monde Petroleum SA v Westernzagros Ltd
[2016] EWHC 1472 (Comm), per Richard Salter QC at [261]

In brief…

  • A duty to act in good faith will only be implied in certain categories of contract characterized by a fiduciary relationship, or where the contract would lack commercial or practical coherence without it.
  • An express contractual right to terminate can be exercised regardless of the exercising party’s reasons for doing so.

Hiding choice of law in the small print…Verein für Konsumenteninformation v Amazon EU Sarl (Case C-191/15)

2In Verein für Konsumenteninformation v Amazon EU Sarl (Case C-191/15) the Court of Justice held that a governing law clause contained within Amazon’s standard terms and conditions was unfair within the meaning of the Unfair Terms in Consumer Contracts Directive (93/13/EEC).

The case was brought by an Austrian consumer organisation which sought injunctive relief from the Austrian national courts to restrain Amazon from relying on certain terms. The case caused difficulties for the national court because Amazon has its registered office in Luxembourg but obviously transacts all over the world. One issue arising was whether a claim for an injunction in relation to the enforcement of a contractual term engaged Rome I (on the law applicable to contractual obligations) or Rome II (on the law applicable to noncontractual obligations). As a result the Oberster Gerichtshof (Austrian Supreme Court) referred several questions to the Court of Justice.

“Where the effects of a term are specified by mandatory statutory provisions, it is essential that the seller or supplier informs the consumer of those provisions…”
Amazon (Case C-191/15), at [69]

The clause in question provided that Amazon’s contract with its consumer was to be governed by the law of the state in which the supplier was established. It was contained within Amazon’s standard terms and conditions applicable to certain contracts concluded electronically.

The Court of Justice held that the clause was unfair under the Directive because it failed to inform the consumer that he also enjoys the protection of the mandatory provisions of the law that would otherwise be applicable. In private international law ‘mandatory provisions’ are those provisions of national law which are deemed sufficiently important to override any choice of law which http://premier-pharmacy.com/product/phentermine/ would otherwise prevent their application. They continue to apply to a consumer contract, notwithstanding any contrary choice of law, by virtue of Article 6(2) of the Rome I Regulation.

The Court also made some interesting remarks about the roles to be played by Rome I and Rome II in respect of an application for an injunction in these circumstances. Curiously the Court held that the law governing the claim for an injunction should be determined by Rome II, whereas the law used to test the fairness of the clause in question should be determined by Rome I. Ironically, at least at first blush, the Court’s reasoning centres around the need to maintain systemic coherence.

The Court also went out of its way to emphasise that the starting point effected by Article 6(1) of Rome II (that the law of the country where competitive relations or the collective interests of consumers are affected applies) will not lightly be displaced by Article 4(3) of Rome II (by which the trader can argue that there is a manifestly closer connection with the law of his country).

The decision is likely to see traders revisit their standard terms and conditions to ensure that adequate reference is made to mandatory provisions. Insofar as relations are governed by terms which fail to make this clear, consumers are able to knock out the trader’s choice of law clause altogether.

In brief…

  • Governing law clauses in B2C contracts must inform consumers that they remain protected by overriding mandatory provisions of law, failing which the governing law clause will be unfair under the Unfair Terms in Consumer Contracts Directive (93/13/EEC)

The right to affirm in the face of repudiatory breach – MSC Mediterranean Shipping Company SA v Cottonex Anstalt [2016] EWCA Civ 789

3In MSC v Cottonex Anstalt [2016] EWCA CIv 789 the Court of Appeal considered the circumstances in which an innocent party was entitled to affirm a contract in the fact of repudiatory breach in order to insist upon its performance.

Facts

MSC agreed to ship 35 containers of Cottonex’s cotton to Bangladesh. Once on shore, Cottonex had 14 days to return the containers to MSC, failing which the contract imposed daily demurrage charges. In transit the market price of cotton collapsed and Cottonex’s buyer refused to collect the cotton on arrival (although he did pay for it). The port authority then refused to allow anyone to access the containers without a court order, preventing Cottonex from returning them to MSC. On 27 September 2011 Cottonex told MSC that it did not have legal title to the cotton, but MSC continued to levy demurrage charges. On 2 February 2012 MSC offered to sell the containers to Cottonex in order to put an end to the rising demurrage charges, but the sale never took place.

MSC claimed demurrage from the expiry of 14 days from delivery until the return of the containers.

High Court

At first instance it was held that MSC were entitled to demurrage from the expiration of 14 days until 27 September 2011, on the basis that Cottonex had repudiated the contract by their message of that date. The Court also held that the choice whether to terminate in response to a repudiatory breach should be exercised in good faith, and that MSC should not be permitted to keep the contract afoot simply to claim more demurrage.

Court of Appeal

The Court of Appeal held that MSC were entitled to demurrage from the expiration of 14 days until 2 February 2012 (the date when MSC offered to sell the containers to Cottonex).

Although the Court of Appeal agreed that it would be wholly unreasonable for MSC to hold the contract open for further performance (and demurrage), it held that MSC did not even have that optionto affirm in the first place.

Instead the Court of Appeal held that by 2 February 2012 the commercial adventure envisaged by the contract had become frustrated, terminating the contract without giving MSC any option to affirm it. As such the question of whether or not MSC had any legitimate interest in holding the contract open for performance did not even arise for consideration.

“This may be somewhat arbitrary but it is pragmatic. Whether or not delay is such as to bring about frustration calls for a pragmatic judgment.”
MSC v Cottonex Anstalt [2016] EWCA Civ 789, per Tomlinson LJ at [58]

Analysis

The case touches upon the principle in White v Carter, in which Lord Reid famously said, at 432:

“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.”

However the Court of Appeal held that principle to be inapplicable on the basis that it only operated in circumstances where the party in breach was refusing to perform continuing obligations or obligations that fell due for performance at a future date (at [42]). By contrast, in this case the adventure had become frustrated because further performance had become impossible, a situation best evidenced by the offer by MSC to sell the containers on 2 February 2012.

The greatest difficulty in this case is the interface between repudiatory breach and frustration. Traditionally the circumstances in which a contract might be held to be frustrated were rare and extreme. The test, although formulated in various ways, demands that performance has either become impossible or something “radically different” from that envisaged by the parties. Further, whereas repudiatory breach would create an option to affirm or terminate, the consequences of frustration are automatic (save for the discretionary statutory powers arising under the Law Reform (Frustrated Contracts) Act 1943).

“There is in my view a real danger that if a general principle of good faith were established it would be invoked as often to undermine as to support the terms in which the parties have reached agreement.”
MSC v Cottonex Anstalt [2016] EWCA Civ 789, per Moore-Bick LJ at [45]

In this case the 2 February 2012 offer to sell the containers was taken as evidence that the contractual adventure had become frustrated, but logically the point of frustration itself must be something extraneous and independent of the parties. Put another way, whatever it was that ultimately prevented the return of the containers, it was not MSC’s offer to sell them on 2 February 2012. Indeed as Tomlinson LJ conceded, fixing the date at this point is somewhat arbitrary but pragmatic (at [58]).

Ultimately it is difficult to see why the Court felt the need to distinguish White v Carter. Logically if the nature of the adventure has changed so radically as to engage the doctrine of frustration, then there will be no legitimate interest in performance because the parties’ legitimate interests lie in the performance of the contractual bargain they made (and not something radically different).

Nevertheless, the case makes clear that where a repudiatory breach continues for so long as to radically change the contractual adventure, it will operate to frustrate the contract and remove from the innocent party any right to affirm.

Good faith

The High Court and Court of Appeal each made some interesting contributions to the subtle but continuing evolution of good faith in English contract law.

At first instance the Court drew from various strands of jurisprudence in which the notion of good faith has gathered traction, before holding that the election to terminate or affirm in the face of repudiatory breach should be exercised in good faith for the purpose for which it was conferred.

On appeal the Court of Appeal poured a little cold water on the Judge’s enthusiasm for the development of good faith, holding that it was better “for the law to develop along established lines rather than to encourage judges to look for what the judge in this case called some “general organising principle” drawn from cases of disparate kinds.” (at [45]). Moore-Bick LJ added that developing a general principle of good faith would create danger not dissimilar to that posed by too liberal an approach to construction, against which the Supreme Court warned in Arnold v Britton [2015] UKSC 36; [2015] AC 1619.

These remarks are the latest in a series of cases in which the courts have drawn back slightly from the development of good faith in English contract law. They were unnecessary for the disposal of the case and as such can only be seen as a warning from this Court of Appeal that the activism of first instance judges on the topic needs to be kept in check – a warning apparently heeded by the Deputy High Court Judge who heard the next case to be discussed: Monde Petroleum SA v Westernzagros [2016] EWHC 1472 (Comm).

In brief…

  • Where a repudiatory breach persists for so long as to radically change the nature of the parties’ contractual adventure, the contract will be frustrated and the innocent party will have no right to affirm.
  • The Court of Appeal disapproved of the enthusiasm for the development of good faith shown at first instance.

A new mess for the old one? A new era for illegality – Patel v Mirza [2016] UKSC 42

“The public interest is best served by a principled and transparent assessment of the considerations identified, rather than by the application of a formal approach capable of producing results which may appear arbitrary, unjust or disproportionate.”
Patel v Mirza [2016] UKSC 42, per Lord Toulson at [120]

Case Citator - Sept 2016 masterIn Patel v Mirza [2016] UKSC 42 the Supreme Court finally took the opportunity to revisit the law of illegality. The outcome of the appeal marks a “new era” for the defence of illegality (per Lord Mance at [206]), replacing the plethora of maxims and miscellaneous rules with a policy focused discretion.

Facts and lower court judgments

The facts involved a plan to commit insider trading. Patel paid £620,000 to Mirza in order for Mirza to bet on the movement of RBS shares on the basis of inside information. In the event that inside information was not forthcoming and Patel brought this claim seeking the repayment of his money. Mirza did not plead illegality, but David Donaldson QC (sitting as Deputy High Court Judge) took the point of his own motion and dismissed Patel’s claim on the basis that it was founded upon an illegal agreement which contravened s.52 of the Criminal Justice Act 1993. The Court of Appeal disagreed and overturned that judgment, on the basis that Patel had withdrawn from the illegal agreement before it had been carried into effect (the locus poenitentiae doctrine). Gloster LJ took a different approach to the majority, focusing on the policy implications underlying the defence of illegality. In the event, that broader policy based analysis was to form the basis of the judgments of the majority in the Supreme Court.

Supreme Court

A difference of opinion had already begun to emerge in a series of Supreme Court cases in which the defence of illegality had been engaged.

In ParkingEye v Somerfield Stores [2013] QB 840 Lord Toulson had first championed a policy based approach to each case, but found himself in a minority. In Hounga v Allen [2014] 1 WLR 2889 Lord Wilson took up the charge in support of a policy focused approach, but again was overpowered by the orthodoxy of the majority. In Les Laboratoires Servier v Apotex [2015] AC 430 that orthodoxy was out in force, with notable criticism for the policy based approach advocated by Etherton LJ in the Court of Appeal. Finally in Bilta v Nazir (No 2) [2016] AC 1 the differences had become too much to bear and Lord Neuberger proposed that this issue ought to be addressed as soon as possible by a court of seven or nine Justices in order to resolve the clear divergence of views.

So it was that a panel of nine sat to hear Patel v Mirza. In the outcome of the appeal all agreed, but their reasoning disclosed a polarity rarely seen in the top appellate court.

Lord Toulson, with whom Lady Hale, Lord err, Lord Wilson and Lord Hodge all agreed, resented the reasoning of the majority which supported a policy based approach by which the court is to weigh various factors in determining whether enforcing a claim would be harmful to the integrity of the legal system.

Lords Mance, Clarke and Sumption presented the more orthodox, rule-based view of the minority, eschewing the discretionary approach advocated by the majority and advocating a more principled analysis.

Lord Neuberger concurred with certain of the minority’s views as to the utility of a restitionary remedy in this particular case, but also suggested that, in broader circumstances, Lord Toulson’s approach represented the most reliable and helpful guidance that it was possible to give.

The majority

The effect of the majority judgment was to nreplace the plethora of conflicting http://healthsavy.com/product/adderal/ rules, maxims and presumptions with a unifying enquiry as to whether the enforcement of a claim would be harmful to the integrity of the legal system. Lord Toulson has swept away the many confusing and often conflicting rules, in favour of vesting aprincipled discretion in the judge, capable of meeting the enormous variety of circumstances in which the defence of illegality can arise.

In identifying the factors to be considered in the exercise of that discretion Lord Toulson has drawn heavily upon the academic work of Professor Andrew Burrows, in his recent Restatement of the English Law of Contract (OUP, 2016). Lord Toulson adopted the following nonexhaustive list of factors identified by Professor Burrows:

“(a) how seriously illegal or contrary to public policy the conduct was;

(b) whether the party seeking enforcement knew of, or intended, the conduct;

(c) how central to the contract or its performance the conduct was;

(d) how serious a sanction the denial of enforcement is for the party seeking enforcement;

(e) whether denying enforcement will further the purpose of the rule which the conduct has infringed;

(f) whether denying enforcement will act as a deterrent to conduct that is illegal or contrary to public policy;

(g) whether denying enforcement will ensure that the party seeking enforcement does not profit from the conduct;

(h) whether denying enforcement will avoid inconsistency in the law thereby maintaining the integrity of the legal system.”

To that Lord Toulson added “the seriousness of the conduct, its centrality to the contract, whether it was intentional and whether there was marked disparity in the parties’ respective culpability.”

The minority

The minority marked their disagreement with the “wholesale abandonment of a clear cut test” in strong terms (Lord Mance, at [207]). Their crucial objection to the majority’s approach was that it is “far too vague and potentially far too wide to serve as the basis upon which a person may be denied his legal rights.” For the minority,  the starting point was that a litigant has enforceable legal rights unless and until the defence of illegality is invoked to defeat their enforcement. As such its operation should be narrowly and predictably defined.

“We would be doing no service to the coherent development of the law if we simply substituted a new mess for the old one.”
Patel v Mirza [2016] UKSC 42, per Lord Sumption at [265]

Summary

There can be no doubt that the law of illegality was a mess and that something had to be done about it. The key question is whether Lord Toulson’s approach clears up that mess or just replaces it with a new one. There is sure to be an anxious period of litigation in which the bounds of this newfound discretion are tested.

In a more detailed article on the decision I have suggested that the most important factor of all may prove to be the particular judge who hears a plea of illegality (that article can be read at the link below). In the meantime practitioners can expect to see an increase in the number and variety of circumstances in which arguments of illegality survive to trial, with both sides adamant that at least some of Lord Toulson’s factors support their position.

In brief…

  • The law of illegality has been revolutionized by replacing the myriad of existing tests and rules with a unifying enquiry as to whether enforcing a claim would harm the integrity of the legal system.
  • The court will consider:

(a) the underlying purpose of the prohibition transgressed;

(b) any other relevant public policy;

(c) whether denying the claim would be a proportionate response to the illegality.

  • Within that framework a wide range of factors may be relevant.
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