I decided that the question (in several parts) would be best scanned and embedded into the answer (see overleaf). This did not impress the examiner!

Transcription

1 LLM COMMERCIAL LAW ( ): LEGAL METHOD AND RESEARCH Question: I decided that the question (in several parts) would be best scanned and embedded into the answer (see overleaf). This did not impress the examiner! Answer (Mark = 76%): see overleaf

2 Question 1 Why shouldn t modern judges who presumably know as much as their predecessors and more make decisions for themselves instead of being constrained by the immemorial prejudices of judges long since dead and rotten? If a mistake has been made in the past, is that a reason to carry on repeating it in the future? 1 The doctrine of judicial precedent, or stare decisis 2, is a keystone in the English legal system. Although, as Zander 3 points out, it is a fundamental objective of any legal system that like cases should be treated alike. The doctrine requires courts to follow precedents set by courts above them in the hierarchy of the courts when considering cases giving rise to the same legal questions. 4 The corollary is that decisions of the House of Lords bind all courts below. When applied in a rigid, unyielding fashion, Cardozo has described precedent as a march of the judges to pitiless conclusions under a remorseless logic which [leaves them] no alternative 5. In such circumstances, the doctrine throws into stark relief the classic tension between certainty and flexibility. As Lord Gardiner describes, strict adherence to precedent can restrict the development of the law. Furthermore, it can also cause the repetition of mistakes, leading to the injustice to which he refers. Conversely, however, the principal benefit of firm precedent is that the law is more certain. Relaxation of precedent can serve to avoid injustice, but the price to be paid is that certainty of outcome is lost. Lord Gardiner s statement was radical. Prior to the Practice Direction (Judicial Precedent) 6, the House was bound by its own decisions. Certainty was preferred to flexibility. The underlying rationale for this stance, that certainty was in the public interest, was expounded most emphatically in 1898 by Lord Halsbury in the case London Tramways v. London County Council 7 : 1 Waldron, J. The Law (1990), Routledge, at p To stand by decided matters. Or Stare decisis et non quieta movere : to stand by precedent and not to disturb settled points (Curzon, L.B. Dictionary of Law, 5th Edition 1998, Pitman Publishing, at p.354) 3 Zander, M. The Law-Making Process (5th Edition, 1999), Butterworths, at p University of Northumbria, Legal Method & Research Workbook, p.52 5 Cardozo, B. The Growth of the Law (1924), Yale University Press, at p.66 6 [1966] 1 WLR [1898] AC 375 (at 380) - 1 -

3 what is that occasional interference with abstract justice, as compared with the [disastrous] inconvenience of having each question subject to being reargued My Lords, interest rei publicae is that there should be finis litium sometime and there can be no finis litium if it were possible to suggest in each case that it might be reargued because it is not an ordinary case 8 But the capacity for grave injustice thereby persisted, and the considerable unease felt was famously summarised by Lord Wright, who observed that an occasional re-argument is a small matter compared with the persistent operation of injustice 9 : I feel that there is greater public inconvenience in perpetuating an erroneous judicial opinion; than the inconvenience to the Court of having a question, disposed of in an earlier case, re-opened. As to the argument that certainty of the law will be destroyed, I can only repeat that certainty is relative 10 When delivering the Practice Statement, Lord Gardner reiterated the default position: that the House would still consider its own decisions as binding upon it. In a press release which accompanied the Practice Direction, guidance as to how often (and when) the statement would be invoked was provided: it should not be supposed that there will frequently be cases in which the House thinks it right not to follow their own precedent. An example [where] the House might think it right to depart from a precedent is where they consider that the earlier decision was influenced by the existence of conditions which no longer prevail, and that in modern conditions the law ought to be different. However, the mere fact that an earlier House of Lords decision is wrong is not necessarily sufficient for the House to overrule it. In Fitzleet Estates Ltd. v Cherry 11, when declining to depart from an earlier decision, Viscount Dilhorne emphasised that the earlier decision, even if wrong, was certainly not so clearly wrong and productive of injustice as to make it right for the House to depart from it. 12 And so in practice the 1966 freedom has been used sparingly: in limited circumstances, and with an abundance of caution. Zander 13 quotes a survey, from Alan Paterson s The Law Lords, that, in the period , in only 28% of cases in which the House was invited to overrule itself, did it do so. Arguably therefore, the diligence of their lordships post-1966 has ensured that the delicate balance between certainty and flexibility is being adequately maintained. As Cross and Harris note the rule has changed, and nobody regrets it Several commentators (notably Lord Wright in 1942, see footnote 9 below) have observed this dictum as properly referring to the doctrine of res judicata rather than stare decisis. However, it remains widely quoted as summarising the contemporary attitude of the House to re-opening its own decisions. 9 Lord Wright, Precedents (1942), 8 Cambridge LJ , at p ibid., p [1977] 1 WLR ibid., at Zander M. The Law-Making Process (5th Edition, 1999), Butterworths, at p Cross R, Harris JW, Precedent in English Law, 4th Edition (1990), Clarendon Press/OUP, at p

4 Question 2 In the wartime case of Duncan v Cammell Laird & Co. Ltd., 15 the submarine Thetis sank during dive-testing, resulting in the death of many on board. The action was brought by a widow of one of the submariners. The defendant shipbuilders were prevented from disclosing plans of the submarine by the First Lord of the Admiralty, on the grounds that their production would be injurious to the public interest. The widow appealed to the House of Lords, but her claim was dismissed. Delivering the judgment of the House, Viscount Simon LC recited earlier authority 16 very much in point to conclude that: a court of law ought to uphold an objection, taken by a public department when called on to produce documents in a suit between private citizens, that, on grounds of public policy, the documents should not be produced. 17 Still further, his lordship decided that a government minister had the last word in such matters: When the Crown is a party to a suit, it cannot be required to give discovery of documents at all. 18 Viscount Simon did clarify, however, that the final decision fell to the judge, and a minister could not refuse disclosure of a document merely because it could involve his department to be criticised, but in cases where the public interest would otherwise be damnified, for example, where disclosure would be injurious to national defence there is no question but that the public interest must be preferred to any private consideration. 19 Thus, Duncan stood for the authority that public interest privilege attached to documents whose disclosure was injurious to the public interest; and, in such instances, the minister s decision to withhold evidence would be final. Conway v Rimmer 20 was an action for malicious prosecution. The appellant former police constable contended that he had suffered prejudice in job interviews, and so sought disclosure of probationary reports after his dismissal from the police force for alleged larceny. The defendant relied on Duncan to prevent such disclosure. In the defendant s favour, the Home Secretary swore an affidavit stating that, in his view, the production of the probationary reports would be injurious to the public interest. 15 [1942] AC Earl v Vass [1822] 1 Shaw s App At ibid 19 At [1968] AC

5 At first instance, the appellant failed in his attempt to get the documents disclosed. But his claim divided the Court of Appeal 21, where Lord Denning MR notably relied upon the 1966 Practice Statement: The doctrine of precedent has been transformed by the recent statement of Lord Gardiner LC. This is the very case in which to throw off the fetters. Crown privilege is one of the prerogatives of the Crown. As such, it extends only so far as the common law permits. It is for the judges to define its ambit, and not for any government department, however powerful. 22 Lord Denning further observed that, since the war, Duncan had been overruled in several Commonwealth jurisdictions, including Scotland in a decision made by the House itself 23. But the Master of the Rolls was the minority voice, and Duncan was upheld. So at this juncture Duncan retain[ed] in England its inglorious authority. 24 The appellant appealed successfully to the House of Lords. The probationary reports were ordered to be produced, thus restoring to the judiciary in England it inherent power to overrule a formally unimpeachable objection on behalf of the Crown 25. As McLeod observes, even without the Practice Statement, the House could have distinguished the facts between a wartime and peacetime case, or between military plans and a probationary report. 26 Indeed, this is arguably what occurred. Perhaps wary of their newly-conferred power, the five speeches of Lords Reid, Hodson, Morris, Pearce and Upjohn ranged in a spectrum from a distinguishing approach (construing the facts of Duncan narrowly), to express departure from Duncan. Paterson 27 notes the stark division of academic opinion over whether the 1966 power was indeed used. Harris 28 contends that the House confined the principles of Duncan to its own special facts, rather than overruling it. The speeches of their lordships are therefore worthy of close examination. Lord Reid distinguished Conway from Duncan without reliance on the 1966 Practice Statement. He entertained no doubt that [Duncan] was rightly decided. 29 But, construing Viscount Simon s speech narrowly, he said it left him with the strong impression that throughout he had primarily in mind cases where disclosure would involve a danger of real prejudice to the national interest. 30 This paved the way for the following distinction: Surely it would be grotesque to speak of the interest of the state being put in jeopardy by disclosure of a routine report of a probationer [1967] 1 WLR Ibid., at Glasgow Corporation v Central Land Board [1956] SC(HL) 1, HL(S) 24 Clark D H, Administrative Control of Judicial Action: the Authority of Duncan v Cammell Laird (1967) 30 MLR 489, at p Clark D H, The Last Word on the Last Word (1969) 32 MLR McLeod I, Legal Method, 4th Edition (2002), Palgrave McMillan, at p Paterson A A, Lord Reid s Unnoticed Legacy a Jurisprudence of Overruling (1981) 1 OJLS 375 at p.384 (footnote 89) 28 Harris J W, Towards Principles of Overruling When should a Court of Final Appeal Second Guess? (1990) 10 OJLS 135 at p [1968] AC 910, at Ibid, at Ibid

6 However, as Stone 32 has noted, in other parts of Lord Reid s complex speech, he clearly did depart from Duncan, in particular his noting an error imputed to Viscount Simon on the legal position in Scotland, which had since been corrected by the House itself 33. Lord Upjohn concurred on that Scottish Law point, deeming it sufficient to describe Duncan as decided per incuriam on that aspect. 34 His lordship also explicitly distanced himself from having to use the 1966 Practice Statement, distinguishing Duncan by the assertion that a routine probationary report could not command the general public interest: apart altogether from our recent liberation from some of the chains of precedent I do not think that the [Duncan] case governs this case I do not think for one moment that Lord Simon had in mind a type of document, such as routine reports on a probationer constable, when he made his general observations on the law. 35 In contrast, Lord Morris s speech clearly echoed the Practice Statement, emphasising departure from Duncan as opposed to distinguishing the class of documents to be disclosed: Your Lordships have a freedom not possessed by the Court of Appeal. Though precedent is an indispensable foundation there may be times when a departure from precedent is in the interests of justice and the proper development of the law. I have come to the conclusion that it is now right to depart from the decision in Duncan's case. 36 Thus Conway v Rimmer endures as an instructive study of the principles both of overruling and distinguishing earlier case law, and the fact that the dividing line between the two can be so difficult to draw. Some of their lordships did exercise the 1966 Practice Statement powers, albeit with caution; while others seemingly were content merely to stress the differences between the documents sought to be disclosed in each case. The last word, and one which encapsulates these difficulties, should be left to A A Paterson, who personally interviewed the law lords involved: Lord Reid told me that he considered the [1966 Practice Direction] freedom had been used by a majority in the case Moreover Lord Pearce (over whom the commentators are divided) told me that he himself had used the freedom in the case it seems fair to conclude that this case was the first (at least technically speaking) in which the new freedom was exercised Stone J, 1966 and all that! Loosing the Chains of Precedent (1969) 69 Columbia LR 1162 (at p. 1170) 33 See also footnote 23, above 34 [1968] AC 910, at Ibid 36 Ibid, at Paterson A A, Lord Reid s Unnoticed Legacy a Jurisprudence of Overruling (1981) 1 OJLS 375 at p.384 (footnote 89) - 5 -

7 Question 3(a) Regalian Properties plc v London Docklands Development Corp 38 concerned a proposed contract which failed to materialise. The plaintiff property developer offered to develop properties upon the defendant Corporation s land, as and when vacant possession was obtained by the defendant. The defendant accepted the plaintiff s offer subject to contract and subject to board approval. The plaintiff then employed architects and other consultants to work on plans for the development but, after difficulties in gaining vacant possession and changes in the general property market, no contract was ever concluded. Nevertheless, the plaintiff claimed that it was entitled to be reimbursed its costs on a restitutionary basis. Rattee J described the plaintiff s claim thus: The principle [counsel for Regalian] asserted was that where parties to a proposed contract have a mutual understanding that there will be a contract between them and pursuant to that understanding one party incurs expense which benefits the other party, then if the intended contract fails to materialise through no fault of the party who has incurred expense, that party can recover the wasted costs from the other. 39 The principle asserted was, in essence, the legal issue raised in the case. Question 3(b) Dismissing Reglaian s claim, Rattee J distinguished the three main authorities upon which the plaintiff relied. Two of these: William Lacey (Hounslow) v Davis 40 and Marston Construction v Kigass 41, are discussed below. The legal principle stood for by the third authority, Sabemo v North Sydney Municipal Council 42, provided a difficult hurdle for Rattee J. The plaintiff Sabemo s tender for a building lease on the defendant council s land was accepted, but no binding contract was concluded. Sabemo undertook substantial work on the proposed development, but the council abandoned it. Sabemo s claim for reimbursement for the work done succeeded. Sheppard J enunciated the following principle of law 43 :- where two parties proceed upon the joint assumption that a contract will be entered into between them, and one does work beneficial for the project, and thus in the interests of the two parties, which work he would not be expected, in other 38 [1995] 1 All ER 1005; 1 WLR Ibid, at pp [1957] 2 All ER [1989] 15 Con LR [1977] 2 NSWLR Ibid, at pp

8 circumstances, to do gratuitously, he will be entitled to compensation or restitution, if the other party unilaterally decides to abandon the project for reasons which, however valid, pertain only to his own position and do not relate at all to that of the other party. Rattee J factually distinguished Sabemo on the narrow ground that there was no unilateral decision to abandon the project 44. However he returned to the passage of Sheppard J to state that the legal principle had no English authority 45, instead:- where, however much the parties expect a contract between them to materialise, both enter negotiations expressly (whether by use of the words "subject to contract" or otherwise) on terms that each party is free to withdraw from the negotiations at any time. Each party to such negotiations must be taken to know that pending the conclusion of a binding contract any cost incurred by him in preparation for the intended contract will be incurred at his own risk, in the sense that he will have no recompense for those costs if no contract results. I accept the submission made by [the defendant], that, by deliberate use of the words "subject to contract" with the admitted intention that they should have their usual effect, [the parties] accepted that in the event of no contract being entered into any resultant loss should lie where it fell. 46 It is submitted that this passage constitutes the ratio of Regalian. Question 3(c) In William Lacey 47, the plaintiff contractor prepared cost-estimate, calculations and bills of quantities for proposed rebuilding works on the defendant s house. The defendant, having led the plaintiff to believe he would be award the contract to them, sold the property without embarking upon the rebuilding. The plaintiff s quantum meruit claim for their work was upheld by Barry J. The plaintiff accepted that ordinarily a tender represented a gamble, but contended that this was no such ordinary case. Firstly, its work was for a collateral purpose (the cost calculations were used for negotiations with the War Damage Commission); and secondly that, because it was led to believe the contract was to be awarded to it, an implied contract arose when the expected contract failed to materialise. 44 [1995] 1 WLR 212, at p Ibid., at p Ibid. 47 [1957] 1 WLR 952, - 7 -

9 Barry J accepted the second argument, holding as a fact that both parties erroneously believed that the contract was about to be made 48. Crucially, he decided that the party from whom payment was sought requested the work and obtained the benefit of it. 49 Thus he decided that the law should imply an obligation to pay a reasonable price for the services obtained. After reviewing this case in Regalian, Rattee J was uncomfortable with the reasoning, and arguably, as asserted by Furmston 50, even critical of it; but he found the ultimate decision to be correct. In doing so, he significantly emphasised the benefit clearly received by the defendant: Although I do not find the reasoning of Barry J entirely easy to follow, the result seems to me to make perfectly good sense on the facts of that case. At the request of the defendant the plaintiffs had done work which had clearly benefited the defendant, quite outside the ambit of the anticipated contract... In those circumstances it is not surprising that the law of restitution found a remedy for the plaintiffs when the contract did not materialise. 51 In Marston v Kigass 52 the defendant s factory had been destroyed by a fire, and so it invited tenders for reconstruction. The plaintiff submitted the lowest tender, but the formation of an ensuing contract was made expressly conditional by the defendant upon it having received sufficient funds from its insurance claim to finance the rebuilding. There was evidence that both parties firmly believed the payout would be sufficient, but in the event, the insurance claim failed. The plaintiff sued for its costs of carrying out preparatory work. Significantly, in the course of that preparatory work, the plaintiff had asked the defendant for an assurance that payment would be made for that work, but no such assurance was forthcoming. Bowsher J held that Marston s claim succeeded, and in doing so applied the principles enunciated in William Lacey. In particular he held that, despite having received no permanent work from the plaintiff, a benefit had been conferred on the defendant: The preliminary works were undoubtedly done for the benefit of the defendant and were only done for the benefit of the plaintiff in the sense that the plaintiff hoped to make a profit 53 The decision attracted stern criticism from the editors of Building Law Review 54, who stated: it is difficult to see what benefit was in fact gained by Kigass (because no works were in fact performed) 55 and Kigass had made its position clear no money, no deal and Marston was well aware of this. Allowing Marston to recover for the preliminary works apparently flies in the face of the negotiations [resulting in Kigass being required] to do the one thing it had made clear it was unwilling to do pay out sums in the absence of a payment from insurers [1957] 1 WLR 952, at p Ibid. 50 Furmston M, Cheshire, Fifoot & Furmston s Law of Contract, 14th Edition Butterworths (2001) at p.77 (footnote 14) 51 [1995] 1 WLR 212, at p [1989] 15 Con LR Ibid, at p Lloyd H QC, Baatz N, Streatfield-James D BLR Ibid., pp

10 In Regalian, Rattee J agreed with this synopsis, emphasising the refusal of Kigass to provide an assurance to pay for the preparatory work, and describing the decision as surprising. 57 Thus Rattee J could fairly be described as disagreeing both with the reasoning and the result in Marston v Kigass, although he made clear that, on the facts before him, it was immaterial whether Marston v Kigass be right or wrong. 58 Question 3(d) British Steel Corp v Cleveland Bridge and Engineering Co. Ltd. 59 concerned negotiations for a sub-contract in which the plaintiff would supply steel nodes to be used in a building which was being constructed by the defendant under a separate (main) contract. The formal contract was never concluded because the parties failed to agree on fundamental terms, but the nodes (all bar one) were manufactured and delivered by the plaintiff pursuant to a letter of intent. The defendant refused to pay for the nodes, alleging that they were late. The plaintiff sued. In holding that no contract was formed between the parties, Goff J decided that the plaintiff could nevertheless succeed in quantum meruit: to expedite performance under the anticipated contract, one [party] requested the other to commence work, and the other complied if, contrary to their expectation, no contract was entered into the law simply imposes an obligation on the party who made the request to pay a reasonable sum for work done pursuant to that request Rattee J considered that Regalian was not analogous, since the costs incurred by Regalian were not for accelerating performance of the anticipated contract works themselves, but were for the purpose of putting itself in a position to obtain and then perform the contract. 61 McKendrick argues that this particular distinction of Rattee J is difficult to reconcile with [his] interpretation of William Lacey, 62 which itself was distinguished due to the work was done for an extraneous purpose. He thus prefers the explanation that the real ground for distinguishing British Steel was that there was a benefit to the defendants in that case. Similar sentiments are expressed by Mannolini, who opines that the grounds of distinction relied upon by Rattee J were not relevant to Regalian s purely restitutionary claim. The only question to be answered being has the defendant been enriched? [1995] 1 WLR 212, at p Ibid. 59 [1984] 1 All ER Ibid, at p [1995] 1 WLR 212, at p McKendrick E, Negotiations Subject to Contract and the Law of Restitution, (1994) 3 RLR 100, at p.102 (footnote 14) 63 Mannolini J, Restitution where an Anticipated Contract Fails to Materialise, (1996) 59 MLR 111, at pp

11 There was one further argument before Rattee J. Counsel for Regalian also relied particularly on a dictum of Goff J to the effect that the party which made the request for work maybe liable to pay for preparatory work which (if the contract had been concluded) would have been subsumed into the contract price. In dispensing with this argument, Rattee J drew an extremely narrow distinction between a building contract as in British Steel and the building lease in the case before him: I do not think [Goff J] had in mind (because he was not concerned with such a claim) that a landowner intending to contract to grant a building lease could find itself liable to pay the intending lessee developer for preparatory work done by the lessee for the purpose of putting itself in a position to obtain and perform the contract. 64 Thus William Lacey, Marston, Sabemo, and British Steel were all carefully and narrowly distinguished by Rattee J. Commentators have questioned these distinctions, and stressed that, Regalian s claim being purely restitutionary, the sole focus should have been on the benefit obtained by the defendant. The law on inchoate contracts remains fertile, with firm criteria still to be formulated by the courts. There are several, and wide-ranging contenders for a principled solution. Key sees a role for the doctrine of equitable estoppel in providing a respectable basis for such cases. 65 Gilleker would rely upon the law of tort 66. It is unsurprising therefore that, after review of the authorities in Countryside Communications Ltd. v ICL Pathway Limited 67, Nicholas Strauss QC admitted: I have found it impossible to formulate a clear general principle which satisfactorily governs the different factual situations which have arisen, let alone those which could easily arise in other cases Much of the difficulty is caused by attempting to categorise as an unjust enrichment of the defendant what is really a loss unfairly sustained by the plaintiff. 68 Question 3(e) Regalian and Willam Lacey were both first instance decisions of the High Court (that is, the courts were not acting in their Divisional Court capacity). It follows that, even if they had been factually indistinguishable, there would strictly have been no binding authority on Rattee J. Holland and Webb give the following explanation: trial courts [deal] for the most part with fact and evidence rather than questions of high legal analysis. They do not, therefore, create precedent [1995] 1 WLR 212, at Key P, Detrimental Reliance in Anticipation of a Contract, (1995) LQR , at p Gilleker P, A Role for Tort in Pre-Contractual Negotiations? (2003) ICLQ 52.4(969) 67 [1999] All ER (D) Ibid, at Holland J, Webb J, Learning Legal Rules, 5th Edition (2003) OUP, at p

12 McLeod observes however, there is a tendency for the High Court, when exercising its jurisdiction at first instance, to follow its own previous decisions as a matter of judicial comity. 70 Thus, in the words of Slapper and Kelly, William Lacey would be of strong persuasive authority 71 However, such persuasive force would not be absolute, for, as McLeod continues, judicial comity is likely to be a less rigid constraint than bindingness McLeod I, Legal Method, 4th Edition (2002), Palgrave McMillan, at p Slapper G, Kelly J, The English Legal System, 6th Edition (2003), Cavendish Press, at p McLeod I, Legal Method, 4th Edition (2002), Palgrave McMillan, at p

13 Bibliography BIBLIOGRAPHY Cardozo, B. The Growth of the Law (1924), Yale University Press Clark D H, Administrative Control of Judicial Action: the Authority of Duncan v Cammell Laird (1967) Modern Law Review, Vol.30, p.489 Clark D H, The Last Word on the Last Word (1969) Modern Law Review, Vol.32, p.142 Cross R, Harris JW, Precedent in English Law, 4th Edition (1990), Clarendon Press/OUP Curzon, L.B. Dictionary of Law, 5th Edition (1998), Pitman Publishing Furmston M, Cheshire, Fifoot & Furmston s Law of Contract, 14th Edition (2001) Butterworths Gilleker P, A Role for Tort in Pre-Contractual Negotiations? (2003) International and Comparative Law Quarterly, 52.4(969) Harris J W, Towards Principles of Overruling When should a Court of Final Appeal Second Guess? (1990) Oxford Journal of Legal Studies, Vol.10, p.135 Holland J, Webb J, Learning Legal Rules, 5th Edition (2003) OUP Key P, Detrimental Reliance in Anticipation of a Contract, (1995) Law Quarterly Review, Vol. 111, p.576 Lord Wright, Precedents (1942), Cambridge Law Journal, Vol.8, p.118 Mannolini J, Restitution where an Anticipated Contract Fails to Materialise, (1996) Modern Law Review, Vol.59, p.111 McKendrick E, Negotiations Subject to Contract and the Law of Restitution, (1994) Restitution Law Review, Vol.3, p.100 McLeod I, Legal Method, 4th Edition (2002), Palgrave McMillan Paterson A A, Lord Reid s Unnoticed Legacy a Jurisprudence of Overruling (1981) Oxford Journal of Legal Studies, Vol.1, p.375 Slapper G, Kelly J, The English Legal System, 6th Edition (2003), Cavendish Press Stone J, 1966 and all that! Loosing the Chains of Precedent (1969) Columbia Law Review, Vol.69, p.1162 University of Northumbria, Legal Method & Research Workbook Waldron, J. The Law (1990), Routledge Zander, M. The Law-Making Process 5th Edition, (1999), Butterworths