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Critically evaluate protections to minority shareholders and their effectiveness in protecting the smaller shareholders from the unfair dominance of the Majority.

Abstract

In order to adequately protect holders of minority interests of a corporate entity against oppressive shareholders whose actions might be at variance with the Company’s Articles, there are several remedies and protection available to minority shareholders as members of the company. Some of these remedies are inclusive of, but not exclusive to, petition on the ground of unfair prejudice, just and equitable winding up and the derivative claim principle. The majority of these remedies are firmly rooted in the common law but recently, these rules have been codified under the Companies Act 2006. For the purpose of this project, the protection afforded to minority shareholders will be critically evaluated and its effectiveness will be highlighted to portray the usefulness of the available remedies.

One of the major factors indirectly responsible for the destruction of a business or corporate enterprise due to loss of management time or excessive cost of litigation is shareholder disputes.¹ The earliest remedies being afforded to minority shareholders dates back to the Cohen Committee Report where corporate bodies gave the court a broad jurisdiction to ascertain what actions of the majority would amount to oppression, and what could be the preliminary hurdles to bring a valid claim against unfair prejudice. ² The claims against majority shareholder oppression has been a long-serving legislative constant even before 1985 where the ability for a minority shareholder to bring an action against the majority was encapsulated in the Companies Act (CA). ³ Protecting the interest of the minority is mandated by law and it is part of the life of a corporate entity.⁴ This right however does not empower the minority to make decisions on the company’s nor does it allow company policies to be set up exclusively by the majority. ⁵

The vast majority of disputes involves shareholders who are in a minority capacity who wish to seek redress because it will be unreasonable for the majority shareholders to bring an action since they could exercise their voting power to seek redress without court interference. ⁶ Nevertheless, before an action could be brought against the majority, there must be elements of good faith on the part of the minorities because if the powers to bring a claim cannot be controlled, company stakeholders could face certain amount of oppression from frivolous law suits.⁷ In the case of Re a Company,⁸ Lord Hoffman stated that the provision of s 75 CA ⁹ must be carefully applied so that it doesn’t become a “means of oppression”.

Petition on the ground of Unfair Prejudice

This is an important remedy which equips the minority shareholder to petition the Court for an order against the majority. This remedy is found in s 994 CA 2006 which was formally s 459 of the CA 1985. This action can furnish an allegation if it is found that the conduct of the majority are performed in an unfairly prejudicial manner against the interest of the stakeholders including the claimant, or that an act or proposed omission of the company is or would likely be prejudicial against the stakeholders by the company. ¹⁰ The action will be against those in authority to act on its behalf and not just the conduct of a member acting in a personal capacity of a shareholder.¹¹ The acts complained of could be in relation to a breach of fiduciary duty between director and stakeholders, breach of legal bargain between shareholders as agreed in the Articles of Association, misappropriation of assets or breach of understanding. In Re Leeds United Holdings plc ¹², the court rejected the petition which was saddled on the assertion that the shareholders did not dispose of their shares as to the manner agreed. The petition was quashed on the ground that the disposal of shares did not relate to the conduct of affairs of the company.

In most cases, this remedy having been upheld by the court after petitioning under s 994, the shares of the minority shareholder/petitioner will be purchased at a fair value.¹³ Since this remedy is relied on by the discretion of the Court, it could then be that the court could mandate the majority to remit their shares for a fair purchase by the minority depending on the seriousness of the breach. However, before resort to the courts, it is important that the petitioner is aware of the nature of fair offer made by respondents. If the respondents i.e. the majority shareholders have made a fair offer to the petitioner which entitles him to rights enjoyable under s 994 CA 2006 but he refuses to accept, the court could strike off his petition.¹⁴ It is worth noting that only company members have a right to petition under this remedy. A case for petition could even be instituted by a nominee shareholder as seen in Atlasview Ltd v Brightview Ltd.¹⁵

The Derivative Claim Principle

It is trite law that only the company excluding all stakeholders can bring an action suo moto.¹⁶ This common law principle is derived from the celebrated case of Foss v Harbottle.¹⁷ The two major principles enunciated in this case are – any matter which negatively affects the company can only be commenced by the company,¹⁸ and only the simple majority of the members can bring a claim on behalf of the company.¹⁹ Part 11 CA 2006 governs the principles of derivative claims.²⁰ A derivative action is normally for the benefit of the company which contrasts with s 994 unfair prejudice remedy. ²¹ If a shareholder brings a petition against the majority instead of a derivative action, the court will not set aside the claim per incuriam but will require the petitioner to bring a derivative action if the wrongdoing is against the company.²²

To bring a claim on behalf of the minority shareholders of the company, the complainant must seek the leave of court before his claim can be entertained in court.²³ It then means that an action against the majority shareholders can only be instituted under the company’s name. Lord Denning MR while echoing the immortal words of Professor Gower, ²⁴ he states that where a derivative action is allowed, a minority shareholder is not suing in his own personal capacity as member of the company or on behalf of other members but solely on behalf of the company. ²⁵ The company is bestowed with the responsibility and authority to bring an action against the wrongdoers in its own personal capacity except if shareholders have been duly delegated such a right to bring a claim. ²⁶

To institute a derivative action is quite a complicated exercise because the court is saddled with the responsibility of screening frivolous cases against the company which may threaten its daily operations, avoidance of multiplicity of individual actions which could be better brought jointly in one suit, etc. In the famous case of Barrett v. Duckett²⁷ the House of Lords held inter alia that there was a more favourable method of resolving shareholder disputes instead of a derivative action which could negatively affect the shareholders’ relationship as members of the company.

The rule in Foss v Harbottle has gone a long way to ease the constraints the common law has over derivative claims. Some of the exceptions to the above common law rule are – a shareholder is permitted to bring an action against the majority which is ultra vires the Articles of association of the company, a shareholder may sue if he is denied his bona fide membership rights, a shareholder may sue the majority if certain element of fraudulent activities are committed against the minority shareholders and where a corporate decision is decided by simple majority when more than a simple majority is required. The ‘fraud on the minority’ provision tends to be the most popular of the common law exception because it is for the benefit of the company in contradistinction to the other three which seeks to ameliorate the personal rights of the minority shareholder. ²⁸

To sum it up in regards to the provisions of Part 11 CA 2006, a derivative claim may be instituted in court against any member including ex-directors or shadow directors or any other person who is directly involved in the accused breach;²⁹ it could be brought where there is negligence, default or breach of trust and duty by a director of the who failed to act in accordance with his duties. ³⁰ It then means that any breach of duty done knowingly or unknowingly will be actionable in court against such director. A derivative claim could also be institute by any company member however few the share capital he holds in the company. ³¹ There is a feeling however that without any sort of restriction on the amount of shares held by a petitioner before he can bring an action in this capacity, the tendency for it to be abused is present. Nonetheless, it will be more theoretical than real for a petitioner who has a single share in a company to bring a derivative action against the majority knowing fully well that he will pay cost as penalty if the law suit is rendered frivolous.

Just and Equitable Winding Up

The Insolvency Act (IA) 1986 provides shareholders with a statutory remedy in the form of a winding-up order on a just and equitable ground pursuant to certain provisions and rights inherent in the CA 2006.³² The aim of a petition via this remedy in the IA 1986 is to oblige the company to seek a validation order thereby putting pressure on the company if a petition for unfair prejudice has also been brought in tandem.³³ However, the court has a certain level of discretion under the IA 1986 as to whether to allow a winding-up petition to be entertained.³⁴ If there is a better alternative remedy apart from the just and equitable winding up such as the unfair prejudice claim, the court will most likely dismiss the former. ³⁵

It seems quite unlikely that a petitioner will be satisfied with winding up a company where he possesses certain amount of shares as shareholder. As earlier discussed, it will be prudent for the petitioner to seek a quote on the remuneration of his shares and exit the company without the burden of pursuing a winding up order. From this standpoint, it can therefore be asserted that the just and equitable winding up remedy will most likely be useful only if s 994 CA 2006 does not satisfactorily mend the wrongdoing complained of by the minority shareholders.

Conclusion

It has been recognised that certain discrepancies were inherent in the common law such as the fraud on the minority and majority rule which didn’t suit the minority shareholders because of its uncertain nature as to whether they had the locus standi to sue and also the disadvantage of power concentration with the majority. Crucially, the advent of the 2006 CA has now filled the void which the common law failed to address adequately. The rigid exceptions in the common law have been relatively softened by the CA.

If the courts decide to condone a liberal attitude, the company will be subjected to unnecessary and trivial claims while if it adopts a strict procedure, the minority will be parachuted to the pre-2006 CA situation where the rules where quite restrictive. Nevertheless, the most important objective is to protect the minority from majority shareholder abuse, at the same time, uphold the needs of the majority.

Bibliography
Primary sources (Cases)

Arrow Nominees Inc. v Blackledge [2000] 2 BCLC 167.

Arrow Trading & Investment v Edwardian group Ltd [2005] 1 BCLC 696.

Atlasview Ltd v Brightview Ltd [2004] BCLC 191.

Barrett v. Duckett [1995] 1 BCLC 243.

Burland v Earle [1902] AC 84.

Carlen v Drury [1812] 1 V & B 154.

CAS (Nominees) Ltd v Nottingham Forest FC plc [2002] 1 BCLC 613.

Cooke v Cooke [1997] 2 BCLC 28; [1997] BCC 17.

Daniels v. Daniels [1978] 2 All ER 89.

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Prudential Assurance Co. Ltd v Newman’s Industries Ltd [1982] Ch. 204.

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Re Bird Precision Bellows Ltd [1984] Ch. 419; [1984] 2 W.L.R. 869; [1984] 3 All E.R. 444.

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Salomon v Salomon [1897] AC 22 (HL).

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Wallerstainer v Moir (No. 2) [1975] QB 373.

Primary Sources (Legislations)

Companies Act 1980

Companies Act 1985

Companies Act 2006

Insolvency Act 1986

Secondary Sources (Articles)

Bahls, S. C. ‘Resolving Shareholder Dissension: Selection of the Appropriate Equitable Remedy’ [1990] 15 J. Corp. L. 285.

Chander, A. ‘Minorities, Shareholder and Otherwise’ [2003] 113 Yale L. J. 119

Reisberg, A. ‘Judicial Control of Derivative Claim’ [2005] 8 ICCLR 335.

Secondary Sources (Textbooks)

Davis P, and Worthington S, (edn), Gower and Davis: Principles of Modern Company Law (9th edn Sweet & Maxwell, 2012).

Dignam A, and Lowry J, Company Law (5th edn OUP, Oxford 2008).

French D, Mayson S, Company Law (27th edn OUP, 2011).

Gower L.C.B, Principles of Modern Company Law (3rd edn Stevens & Sons Ltd, London 1969).

Joffe V, & Others, Minority Shareholders (3rd edn OUP, USA 2008)

Secondary Sources (Working Papers/Committee Reports)

Committee Report on Company Law Amendment, 1945, Cmnd. 6659

This work was produced by one of our professional writers as a learning aid to help you with your studies

The use of pre-recorded video evidence in sexual assault and rape trials. Has the law of criminal evidence managed to strike an appropriate balance between protecting the victims of sexual assault, who are usually the prime witnesses in prosecution proceedings, and protecting the due process rights of defendants charged with these crimes, in particular the right to properly test the evidence which has been admitted against them?

Introduction:
i. Background to the conflicting issues of this research

In the title of this paper, it is conjectured that victims of sexual assault are usually the prime witnesses in prosecution proceedings for these types of crime. The reason for this is that most sexual assaults are perpetrated in private by someone already known to the victim. What is more, often there is no forensic evidence available and so victims of sexual assault are not only the prime witnesses in prosecution proceedings for these types of crime but, often, the only evidence that a crime has taken place at all . This can place real burden on sexual assault victims during the trial stage of the prosecution. For one thing, the victim must relive the traumatic events in question, by explaining them to the court, jury and defence barrister. Secondly, a common defence strategy is to undermine the credibility of the victim and to convince the Court either that no sexual contact occurred or that it was consensual. In the absence of forensic evidence, often it boils down to the victim’s word over that of the defendant and it is very difficult to resolve two conflicting accounts to the satisfaction of the criminal standard of proof required for a successful conviction. As the Office for Criminal Justice Reform writes, “Those victims whose cases do make it to court are faced with the intimidating prospect of having to recount traumatic and often intimate details, endure cross-examination and in some cases have information about their past sexual behaviour presented to the court as evidence against them. ”

In light of this, it is not surprising that (i) the rates of conviction for rape and sexual assault are so low (approx. 6% of all cases brought result in a successful prosecution ); and, (ii) a substantial number of victims of sexual assault or rape do not report their crimes to the police, either in a timely manner* or at all**, or choose to drop their claims when it transpires that they will have to testify as a prime witness in the prosecution against their attacker . Research suggests that the drop-out rate is currently 33%. As the Office for Criminal Justice Reform writes, “Research has found that victims who declined to complete the initial investigative process and victim withdrawals accounted for over one-third of cases lost at the police stage. Key contributory factors were not being believed and fear of going through the criminal justice process. ”

*The chances of securing a successful prosecution against a rapist or sexual attacker decrease substantially as time passes and therefore anything that leads victims to delay reporting their crime to the Police has the consequential effect of reducing the rate of successful conviction.

**This author does not purport to suggest that these are the only reasons why victims of sexual assault choose not to report their crimes to the Police; it is well documented that victims of sexual assault often feel shame and guilt for what has happened to them, as if they are somehow to blame, and this is another major reason why such victims often prefer to keep their ordeals secret . Other factors include fear of retaliation and the distrust of the reactions of family and friends .

While these barriers to timely reporting and successful prosecution cannot all be redressed by criminal justice reform, nevertheless, in light of the fact that some of these barriers emanate from fear of or lack of confidence in the court process itself, the law of criminal evidence can play an important role in mitigating some of these barriers; for example, by protecting these vulnerable witnesses and making the ordeal of trial less traumatic, the law of criminal evidence could, eventually, change victims’ perceptions of the trial process and make them less likely to allow their fears of that process to interfere with their decisions to report their sexual assaults.

One reform proposal which is often discussed in this context is the use of pre-recorded video testimony for victims of sexual assaults. The idea behind this proposal is that victims of such crimes are less likely to be afraid of the trial process if they know that they can record their testimony in advance and that they cannot be cross-examined by their attacker’s barristers (even if they are asked to respond to certain questions within their testimony). Such reforms have been implemented in the field of youth justice for some time—for example, there are various provisions under the Youth Justice and Criminal Evidence Act 1999 which allow for the use of video links to shield child victims of sexual or physical abuse from their attackers—but are relatively new in the context of adult rape and sexual assault cases.

While the use of video testimony is clearly beneficial to victims, prima facie it poses a real risk to the integrity of the due process rights of defendants charged with these crimes. Under the criminal justice system of England and Wales there is a presumption that all persons charged with a criminal offence are innocent of that offence until proven guilty . This is provided, inter alia, by Article 6(2) of the Human Rights Act 1998 which states that, “Everyone charged with a criminal offence shall be presumed innocent until proved guilty according to law. ” What is more, it is a human right of all persons charged with a criminal offence to be able to challenge effectively the accuracy of any evidence which is admitted against them. This is provided inter alia by Article 6(3) of the 1998 Act which states that, “Everyone charged with a criminal offence has the following minimum rights: (…) (b) to have adequate time and facilities for the preparation of his defence; (…) (d)to examine or have examined witnesses against him and to obtain the attendance and examination of witnesses on his behalf under the same conditions as witnesses against him… ”
In this present research paper, we are concerned specifically with the question of whether or not the use of video testimony in sexual assault cases (involving both adult and child victims) unduly prejudices the right of criminal defendants to properly challenge the accuracy and reliability of evidence adduced against them.

ii. The aims and objectives of this research:

The primary aim of this research is to evaluate the extent to which the law of criminal evidence has managed to strike an appropriate balance between protecting the victims of sexual assault, who are usually the prime witnesses in prosecution proceedings, on the one hand, and protecting the due process rights of defendants charged with these crimes, in particular the right to properly test the evidence which has been admitted against them, on the other?

The secondary aim of this research is to derive recommendations for reform to the law of criminal evidence to effect a more appropriate balance between protecting the victims of sexual assault on the one hand, and protecting the due process rights of defendants charged with these crimes on the other.

The objectives of this research paper are as follows: To identify the legal provisions which purport to allow the use of video evidence in sexual assault and rape trials; to identify the procedures which must be adhered to when utilizing this kind of evidence; to evaluate the likely impact of the use of video testimony on rates of reporting and successful prosecution; to examine the right of criminal defendants to test the evidence relied upon against them by the Crown Prosecution Service and to identify the extent to which it might be argued that this right is a qualified right under the law of England and Wales; to evaluate the extent to which the use of video evidence might prejudice the right of criminal defendants to test the evidence relied upon against them by the Crown Prosecution Service; to identify and critically evaluate the safeguards which exist currently to ensure that the use of video evidence is not permitted where its use would prejudice the ability of the defendant(s) in question to receive a fair trial; to evaluate whether or not an appropriate balance has been struck in practice between protecting the interests of victims through the use of video testimony on the one hand and preserving the interests of justice and the right of criminal defendants to test the evidence relied upon against them by the Crown Prosecution Service, on the other; to derive high level recommendations for reform to the way that the law currently permits the use of video evidence in sexual assault and rape trials.

iii. The structure of this research paper.

The structure of this paper takes the following form: In chapter one, this author traces the development of the use of video evidence in sexual assault and rape trials, identifies the legal provisions which regulate the use of such evidence and the procedures which must be followed when this type of evidence is relied upon by the Crown Prosecution Service and critically evaluates whether or not the use of video evidence is really likely to have any impact on rates of reporting and rates of successful prosecution of rapists and sexual offenders.

In chapter two, this author traces the development of the right of criminal defendants to a fair trial, generally, and, specifically, their right to test the evidence adduced against them, identifies the legal provisions which give rise to these rights and evaluates the nature of those rights (i.e. whether they are absolute rights or qualified rights) and evaluates the extent to which the use of video evidence might prejudice the right of criminal defendants to test the evidence relied upon against them by the Crown Prosecution Service, and the circumstances under which that prejudice is likely to be the greatest.

In chapter three, this author identifies and critically evaluates the safeguards which exist currently to ensure that the use of video evidence is not permitted where its use would prejudice the ability of the defendants to receive a fair trial and evaluates whether or not, in practice, the law has managed to strike an appropriate balance between protecting the interests of victims through the use of video testimony on the one hand and preserving the interests of justice and the right of criminal defendants to test the evidence relied upon against them by the Crown Prosecution Service, on the other. Also, in this chapter, this author derives high level recommendations for reform to the way that the law currently permits the use of video evidence in sexual assault and rape trials.

Finally, this author presents his conclusions to this research.

1. Using video evidence in sexual assault and rape trials; is it likely to have a positive impact on rates of reporting and rates of successful prosecution of rapists and sexual offenders?

As noted in the introduction of this paper, it has been argued in the academic literature that a significant barrier to the timely reporting of sexual offences (and also one of the reasons why the drop-out rate—i.e. the number of victims choosing to withdraw their claims before the conclusion of the trial—is so high ) are common victim perceptions that if they report their assault they will be subjected to a traumatic trial process in which their account of events will be cross-examined by their perpetrator’s legal representatives and their character will be called into question .

The use of pre-recorded video testimony is designed to mitigate these barriers (ultimately) to prosecution by protecting these vulnerable witnesses and making the ordeal of trial less traumatic for them. Over time, it has been conjectured, victims’ perceptions of the trial process will change and they will be less afraid of the trial process and more willing to report their sexual assaults when they occur.

Currently, there are two video-based special measures for vulnerable victims . These are provided by the Youth Justice and Criminal Evidence Act 1999. The first is where the victim is permitted to present his or her evidence-in-chief in the form of a video statement rather than in person. This is provided by section 27(1) of the Youth Justice and Criminal Evidence Act 1999 which states that, “A special measures direction may provide for a video recording of an interview of the witness to be admitted as evidence in chief of the witness. ”

Section 27(4) of the 1999 Act however makes it clear that dispensation to use this special measure will only be granted where the court is satisfied that the witness in question will be made available for cross-examination (whether that be cross-examination in person or via a ‘special measure’ alternative equivalent): “Where a special measures direction provides for a recording to be admitted under this section, the court may nevertheless subsequently direct that it is not to be so admitted if— (a) it appears to the court that— (i) the witness will not be available for cross-examination (whether conducted in the ordinary way or in accordance with any such direction), and (ii) the parties to the proceedings have not agreed that there is no need for the witness to be so available; or (b) any rules of court requiring disclosure of the circumstances in which the recording was made have not been complied with to the satisfaction of the court. ” The intention behind this provision was to ensure that criminal defendants accused of crimes against vulnerable victims were not unduly prejudiced by the existence of this special measure; if the court and jury watched a video statement from a victim explaining how they witnessed the defendant commit a criminal offence, that defendant would be grossly prejudiced if he did not have an opportunity to challenge any aspects of the video statement in question.

The second type of video-based special measure provided under the Youth Justice and Criminal Evidence Act 1999 is where the cross-examination and re-examination of a witness’s testimony by the defence’s legal team is pre-recorded rather than conducted live in the courtroom, in front of the defendant. This is provided by section 28(1)(b) of the Youth Justice and Criminal Evidence Act 1999: “Where a special measures direction provides for a video recording to be admitted… as evidence in chief of the witness, the direction may also provide— (a) for any cross-examination of the witness, and any re-examination, to be recorded by means of a video recording; and (b) for such a recording to be admitted, so far as it relates to any such cross-examination or re-examination, as evidence of the witness under cross-examination or on re-examination, as the case may be. ”

To ensure that this special measure does not dilute the defence’s ability to cross-examine or re-examine a witness, the 1999 Act provides that the court and the defence’s legal representatives must be able to see and hear the live recording session and be able to communicate directly with the persons in the room. The Act also provides that the defendant should be able to see and hear the examination and that he or she should be able to communicate with his or her legal representatives throughout the process: “Such a recording must be made in the presence of such persons as rules of court or the direction may provide and in the absence of the accused, but in circumstances in which— (a) the judge or justices (or both) and legal representatives acting in the proceedings are able to see and hear the examination of the witness and to communicate with the persons in whose presence the recording is being made, and (b) the accused is able to see and hear any such examination and to communicate with any legal representative acting for him. ”

If a court has granted the use of this special measure then it is imperative that the defence’s legal representatives ask the child witness all of the questions, the answers of which they plan to later rely on in court as they will not be entitled to put any new questions to the witness on completion of this recording session unless any new matters come to light which the defendant or his legal team could not have been expected to have discovered previously with reasonable diligence .

These special measures are available to adult victims of sexual assault or rape by default. However, it is up to each witness to decide whether or not they wish to take advantage of one or both of these measures. This presumption of vulnerability is provided by section 17(4) of the 1999 Act which states that, “Where the complainant in respect of a sexual offence is a witness in proceedings relating to that offence (or to that offence and any other offences), the witness is eligible for assistance in relation to those proceedings by virtue of this subsection unless the witness has informed the court of the witness’ wish not to be so eligible by virtue of this subsection. ”

By virtue of section 16(1) of the 1999 Act, these measures are also available to child witnesses aged sixteen or less: “For the purposes of this Chapter a witness in criminal proceedings (other than the accused) is eligible for assistance by virtue of this section (…) if under the age of 17 at the time of the hearing… ” For child witnesses, not only is there a presumption that their testimony will be given via video but this is nearly mandatory. As Burton, Evans and Sanders explain, “For child witnesses in need of special protection (defined by section 21 of the YJCE Act) the provision of video evidence-in-chief or live television links is near mandatory, and it is not necessary to demonstrate that they would improve the quality of the witness’s evidence. ”

Leaving aside any discussion of the potential prejudicial impact that these special measures can have on defendants’ ability to defence a claim of sexual assault or rape of a minor or adult—a discussion which will be reserved for the following chapter of this paper—the first question which, in the opinion of this author, must be asked, is whether or not these special measures actually mitigate the barriers to effective testimony identified previously in this paper.

It will be recalled that one such barrier was the victim’s fear of cross-examination and being made to feel like the one to blame for the ordeal . And yet, while the second of the two special measures discussed above does allow the cross-examination to take place in a venue other than a court of law, in all other respects a video cross-examination is equivalent to a live court-based cross-examination. As the Crown Prosecution Service explains, in its ‘CPS Policy for Prosecuting Cases of Rape’, “Giving evidence in court can be a particularly traumatic experience for victims of rape. In particular, some victims may find it difficult to give evidence in the sight of the defendant. If this is so, we can apply to the court for the victim to give evidence in another way so that he or she can give their best evidence. These alternative ways of giving evidence are known as ‘special measures’… [While] the victim or witness will not have to give ‘live’ evidence about what happened to them… they will still have to answer questions put to them by the defendant’s lawyer in crossexamination. ” (emphasis added)

Therefore, while this special measure might make it more comfortable for a vulnerable or intimidated witness, it is not entirely clear, at least in theory, how it purports to mitigate the victim’s fear of cross-examination itself. This is a point raised by Childs and Ellison, who argue that the efficacy of these special measures are undermined by the fact that the process remains an adversarial one, even though it is pre-recorded and conducted in a venue other than a court of law: “There is also a risk… that a commitment to traditional adversarial values and methods may yet limit the impact of reforms. ”

Another barrier that was identified previously was the victim’s fear of being in contact with the defendant. While pre-recorded video evidence certainly allows a vulnerable witness to give their testimony and responses (to cross- or re-examination) without having to be in the same room as the defendant, as noted previously the defendant is allowed to listen into the recording session and therefore it is not entirely clear how the victim receives any benefits from these special measures whatsoever, other than those which they would be able to enjoy anyway through the use of screens or live links pursuant to sections 23, 24 or 25 of the Youth Justice and Criminal Evidence Act 1999 .

Another criticism which has been raised, especially in respect of the use of pre-recorded video cross-examination, is that, historically, these measures have not often been made available to victims of sexual offences, the Courts preferring to rely upon live testimony, whether given orally in court or via a live video link (via the special measures provided by sections 23 and 24 of the Youth Justice and Criminal Evidence Act 1999. As Childs and Ellison argue, writing in 2000, “While the special measures contained in the YJCEA 1999 are to be welcomed, the protection they afford rape complainants has, disappointingly, been constrained by a continuing attachment to the primacy of oral evidence… Adult rape complainants are to benefit from the availability of screens and CCTV but they are to be denied the protection inherent in the use of video-recorded evidence. Generally, adult rape complainants will still be required to give live oral evidence in criminal proceedings, albeit via a TV link. ”

Another criticism which has been levied against the use of these video-based special measures is that somehow a victim’s testimony is diluted by the fact that the jury is unable to see the witness in a live environment. As Burton et al note, “Some practitioners had reservations about televised evidence because they thought it was less convincing than ‘live’ evidence. ”

While this argument has real intuitive appeal, in reality there is very little evidence to support this view. As Burton et al conclude, “There is no research evidence to indicate that acquittals are more likely using these methods, however. ” This is something that will be discussed in more detail in the following section of this paper.

In conclusion to this chapter, while this author cannot comment upon the general advantages or disadvantages of video-based special measures in cases of rape or sexual assault*, he is not wholly convinced that they manage to discharge the barriers which are faced by rape and sexual assault victims and therefore is not convinced that their use is having the effect of increasing rates or reporting and conviction for these types of offence. Victims still have to undergo a adversarial style cross-examination, which has been reported to be the most daunting prospect of a rape trial for rape victims, and even though this might be conducted in a venue outside of the courtroom, the rape victim nevertheless has to respond directly to questions from the defendant’s legal representatives while knowing that the defendant is listening into the recording session and able to communicate with their lawyers throughout.

In light of this, the pre-recorded video measures provided by the Youth Justice and Criminal Evidence Act 1999 is unlikely to alleviate victim perceptions that if they report their assault they will be subjected to a traumatic trial process in which their account of events will be cross-examined by their perpetrator’s legal representatives and their character will be called into question.

In any event, it appears that these measures, particularly pre-recorded video cross-examinations, are rarely used with adult victims, the Courts preferring to grant other special measures to these vulnerable witnesses such as screening or live CCTV links.

* In this chapter this author has been concerned only with the extent to which video-based special measures are able to help vulnerable victims overcome the barriers which are reported to be responsible for under-reporting and low overall conviction rates. These measures may well have benefits other than overcoming these barriers, but these are not of relevance to this present research paper. Therefore, one should be cautious not to use the conclusions of this paper to support an argument that video-based special measures should not be used; all that can be said is that they are not apparently very effective at meeting their direct intended objectives.

2. The right of criminal defendants to a fair trial and to test the evidence adduced against them; are these rights prejudiced by the use of video evidence and under what circumstances, in particular?

As noted in the introduction to this paper, Article 6(3) of the 1998 Act provides that any person charged with a criminal defence has the right to examine or have examined witnesses against him and to obtain the attendance and examination of witnesses on his behalf under the same conditions as witnesses against him . The question which falls for determination in this chapter is whether or not this right is unduly prejudiced by the use of the two video-based special measures identified and analysed in the previous section of this paper.

While it is the case that these special measures are not used in every case of adult rape or sexual assault, in this chapter we are concerned with the potential for prejudice when either or both of these measures are employed. In other words, the fact that these special measures, particularly pre-recorded video cross-examination, are rarely used in adult cases will not (and should not ever) be cited as a defence to any claims of prejudice which are levied towards them.

The first thing to do is to evaluate what kind of right is created by Article 6(3)(d) of the Human Rights Act 1998; if this right is an absolute right then it would never be appropriate to derogate from it in the interests of protecting vulnerable witnesses . However, if the right is a qualified right, then it might be legitimate, where the circumstances dictate, to derogate wholly or partially from that right to serve a competing but legitimate interest .

If one relied upon the wording of Article 6 of the Human Rights Act 1998 then one would be forced to conclude that Article 6(3)(d) is an absolute right as it states unequivocally that all persons charged with a criminal offence are entitled to enjoy this right, which grants upon them an ‘equality of arms’ and the tool required to be able to clear themselves of the charges brought; namely, the right to cross-examination . This interpretation seems to be in line with the Strasbourg jurisprudence .

However, there is good common law authority for the proposition that this right is a qualified right and also for the proposition that, under certain circumstances, it is appropriate to derogate from this right in the interests of protecting vulnerable witnesses. For example, in the recent case of Bonhoeffer, R (on the application of) v General Medical Council [2011] EWHC 1585 the Court allowed a key witness to admit his evidence in written form only, which precluded cross-examination, on the basis that the witness would face persecution back in Kenya, where he lived, if he appeared as a witness and admitted to being a homosexual. In this case, the Court accepted that the defendant’s right to cross-examination under Article 6(3) of the Human Rights Act 1998 had been derogated from; however, the Court justified this derogation using a utilitarian (least harmful path) justification. A similar justification was employed in the case of R v Xhabri [2005] *.

*Some authors have argued that this interpretation of Article 6 is at odds with the wording of the 1998 Act and while this present author agreed with that thesis, this is not the time or the place to engage with this subsidiary debate. For our present purposes, all that matters is that it is settled law that Article 6(3)(d) is a qualified right and not an absolute standard.

Therefore, we must conclude that the right to cross-examine is a qualified right and, consequently, that the potential for video-based special measures to cause an infringement of a defendant’s right to cross-examine is limited; after all, it cannot be said to be an infringement of a right if that derogation can be legitimized through legal authority.

In any event, it is not entirely clear that the use of video-based evidence is always likely to be prejudicial to defendants. For one thing, as argued in the previous chapter of this paper, these special measures do not substantially affect the cross-examination process, and therefore it is not straightforward to contend that a defendant’s right to cross-examine is affected, let alone limited, by the employment of pre-recorded video cross examination.

What is more, there is no evidence to suggest that a conviction is more likely to result from the use of video-based special measures. In their experimental study entitled, ‘The impact of pre-recorded video and closed circuit television testimony by adult sexual assault complainants on jury decision-making’, Taylor and Joudo found that juries were not more likely to convict defendants charged with rape or sexual assault when the victim’s testimony was presented as a pre-recorded video, than they were when it was presented face-to-face or via a live link CCTV . This study had a strong methodology: the researchers conducted 18 mock trials using a total of 210 jurors. In one third of the trials, the jurors heard the victim’s evidence live, face-to face; in one third of the trials, the jurors heard the victim’s evidence live, via a live link CCTV system; and, in the remaining third of the trials, the jurors heard the victim’s evidence from a pre-recorded video. After the trials, the researchers undertook perception and attitude surveys via a questionnaire. This sought to measure a range of attitudes and perceptions including the degree to which the jurors felt they were able to empathize with the victim and whether or not they thought the accused was guilty of the crime. The conclusion of this study was that the mode of transmission of victim testimony had no statistically significant impact upon juror perceptions: “The study finds, overall, that immediately following the trial but before jury deliberation, mode of presentation of testimony (face-to-face, CCTV or pre-recorded videotape) did not impact differentially on juror perceptions of the complainant or the accused, or guilt of the accused. ”

While the methodology of this research study was generally sound, there is anecdotal evidence to support the view that real victims come across better on pre-recorded video than they do live. As the Office of Criminal Justice Reform reports, “In one case the video was not used as it required substantial editing to remove inadmissible evidence. However, prosecution counsel later commented that they wished in hindsight that the video had been used, as the victim was not as good live as on the recording. ” While one might argue that such evidence is of limited use, in the opinion of this author if Taylor and Joudo’s study was repeated using real rape victims in real rape trials then it is highly likely that the mode of presentation of testimony would impact differentially on juror perceptions of the complainant; after all, they are likely to feel more comfortable giving testimony about their horrific ordeal in a video recording studio than they would be giving that same testimony live, in a court of law, with twelve jurors, a judge and several lawyers all looking at them. Further research needs to be conducted to test these claims empirically.

If nothing else, the pre-recorded testimony would likely have bee

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The Case of Amanuel and His Political Asylum Claim in The United Kingdom

I. Introduction

This paper will establish that Amanuel has an appropriate case for refugee status in the United Kingdom on the basis of a legitimate claim for political asylum. The analysis that shall provide the underpinning for this legal conclusion is developed upon the following framework – a summary of the salient facts extracted from the scenario as presented; a review of the applicable international, European Community and United Kingdom conventions, statutes, regulations and case law that govern such claims; a critique of the Home Office position that is provided as the UK government opposition to Amanuel’s claim; the consideration of any further circumstances not specifically noted in the scenario that are submitted as operative in similar applications.

It is also submitted that were an appropriately constituted UK immigration tribunal to deny Amanuel’s claim for refugee status based on his asylum claim, Amanuel would properly qualify for the alternative relief of a temporary stay based upon humanitarian reasons in accordance with UK law.

It is noted that while there is a graphic quality to the facts, care as been taken to approach the issues as clinically and as dispassionately as possible. There is merit in the Home Office representation that on an international scale, the present case is not nearly the most serious of matters; asylum applications generally fit between a range of pure ‘political’ disagreements with a particular regime, to the wholesale displacement of peoples, acts of genocide and systematic abuses directed at identified groups within a particular country. Notwithstanding the relative lesser degree of physical harm experienced by Amanuel and his hear family, it is contended that the cumulative effect of the events presented provide an appropriate basis for asylum in the UK.

II. The relevant facts

The following facts are extracted from the scenario and presented as those essential to the legal issues framed by the statutes and the accompanying jurisprudence. Where an element of the scenario is not highlighted, such as Amanuel’s status as a law student, it is presumed to be irrelevant to the asylum analysis.

(1) Ethiopia has a lengthy history of political unrest, prolonged sectarian violence and general national disharmony. It is a nation of extreme poverty where ruling parties are dictatorships that have generally have maintained control either as direct instruments of the military or otherwise backed by military rule. Amanuel’s claim must be assessed in the context of this history; it is not an isolated example. The ongoing conflicts in neighbouring Eritrea have produced an additional humanitarian burden, as thousands of Eritreans fleeing their nation’s civil war have fled to Ethiopia as refugees.

(2) Political asylum as a component of refugee claims has become an increasingly common aspect of this process throughout the world. The UK and European case law cited in this paper are only a representative sampling of the larger body of jurisprudence that considers this complex issue. Further, Ethiopian refugee claims made to the UK have been a subject of specific Parliamentary concern; over 450 Ethiopian claimants were denied status in 2007.

(3) For the purposes of the present analysis, the Ethiopian Democratic Party (EDP) is presumed to be a legitimate political organization, i.e. one that is democratically constituted, with a party constitution or similar normal position that disavows terrorism or similar methods that are contrary to international law. Amanuel is not an applicant whose background or political involvement would otherwise disqualify him from the accepted definition of refugee.

(4) It is accepted that the EDP constitute a political opposition target for the Ethiopian government. Amanuel and his family are bona fide members of the EDP and their personal political convictions are legitimate self-expression; the actions undertaken by Amanuel in the course of his dealings with the government and its police arms are not a contrivance created to secure asylum; as noted below, some of the actions such as attending at a police station to complain may have been foolhardy, but they were not manufactured asylum seeking grounds.

The circumstances surrounding the disappearance of Saleh are consistent with this position. However, these particular facts only corroborate Amanuel’s position (recognising they are largely hearsay assertions) , as opposed to constituting ‘stand alone’ persuasive evidence of the risks faced by Amanuel and his family in Ethiopia.

(3) The cumulative effect of the events in 2006 concerning the house search by the Ethiopian police is also supportive of Amanuel’s position. As with the poorly corroborated evidence of Saleh’s disappearance, the weight to be attached to the single incident involving the search of Amanuel’s family is limited. This proposition is advanced in recognition that the official reason for the search is a seemingly dubious pretext, but the acts of threatened and actual violence directed to Amanuel, his mother Mary and his young sister are themselves not sufficient grounds on which to build a refugee cliam. The totality of the circumstances is important to the analysis provided below.

(4) The arrest and beating of Amanuel for his comments concerning the Ethiopian Constitution are relevant on two distinct bases. The first is that Amanuel’s ability to freely express himself concerning the scope of constitutional protection is very limited; the statements that he made were legitimate self-expression in any Western democracy, a fact that is also not determinative of the issues. However, by being labeled a criminal and opponent of the governing regime is evidence that Amanuel’s long term safety is directly related to his political views.

There is a second and insidious element to this portion of the scenario. It may be concluded that given the swift official response to Amanuel’s comments made in the relative obscurity of a law class, the government are monitoring his words and actions. This circumstance is consistent with someone who is now a targeted political opponent, and when taken together with the other facts identified in the scenario, these circumstances provide a compelling prima facie factual basis on which to consider the legal elements of the asylum application.

III. The Legal Framework

As noted in the Introduction, the legal framework against which the identified facts must be applied has three constituent elements, the relative importance of each to a UK application is considered below. These elements are the International law; the applicable EU provisions; UK statutes and related case law.

(1) International law – the United Nations Convention

The convention is a component of international law that has been incorporated by specific reference into EU and UK law. The definition of ‘refugee’ is central to Amanuel’s position; he must establish that he has a “well-founded fear” of persecution that is a result of his political opinions; he must also establish that he is unable to obtain the requisite protection of his rights in Ethiopia from the domestic authorities.

(2) European Union refugee provisions

The EU provisions concerning asylum and refugee status are consistent with the general UN approach. In recent years, a significant body of EU case law has developed concerning the distinction between an asylum seeker and economic migrants. The Hague Programme has four distinct elements, of which the ‘qualification Directive’ is the most pertinent to Amanuel’s case.The central theme of this jurisprudence has been the stated fear that bogus asylum seekers will subvert the legitimate asylum claims; the EU approach is therefore directed to the prevention of illegal immigration that is cloaked in refugee clothing.

The ECHR provides a clear prohibition against the forced return of any person to their country of origin by a member state where the subject may be detained or tortured for their political views. By virtue of the Human Rights Act, 1998, this provision is submitted as operative in UK law.

(3) The UK Nationality, Immigration and Asylum Act (NIA) and the relevant case law

As a general proposition, the UK applies the UN Convention definition of refugee as stated above.The NIA also provides that an asylum claim must be made as soon as reasonably possible upon the claimant’s arrival in the UK. It is noted that not only has Amanuel evidently complied with this provision, he brings proverbial ‘clean hands’ to his application, in contrast to asylum seekers who make their applications based on false travel documents or whose application is advanced after they are held by UK authorities for failing to comply with entry provisions.

A large subset of the UK case law decided in the past 15 years on refugee issues has centred on the overarching question of ‘asylum overload’ as a threat to the general stability of UK society.In particular, the Court of Appeal has noted that the often stated “right” to asylum is nothing of the sort. The Court has emphatically determined in a series of decisions that refugee status is not the equivalent of an international passport in the UK, the right extends only to the ability to apply, not the acceptance of the claim by the state.

The UK cases have also delineated the distinction between certain torture and imprisonment for one’s political views on return to the country of origin, versus the degree of risk faced by the applicant of such a consequence. It is noted that as with all other elements of refugee claims, the UK courts do not assess the evidence to an absolute standard. The House of Lord’s definitions as established in the 1988 decision of Sivakumuran are applicable – the fear of persecution must be “well founded”, with a “reasonable degree of likelihood” that the applicant will be subjected to such treatment, not proof beyond a reasonable doubt. The standard must apply whether the subject’s return is voluntary or involuntary.

IV. The Home Office position – a critique

The Home Office position as expressed in the scenario requires careful attention. There are aspects of the position that are frankly illogical; these are specifically noted below. However, as with the general thrust of Amanuel’s’ claim, the best approach to the Home Office views is to determine whether its cumulative effect, like that of the Amanuel claim, provides a persuasive basis on which to reject the asylum application.

The Home Office position at its highest may be summarised as one that acknowledges that Amanuel and his family face a difficult time in Ethiopia given their political views. The Home Office position must not be taken as a sanction or otherwise endorse the methods employed by the Ethiopian government to quell apparent legitimate dissent. For the Home Office, the matter is clearly one of degree. Amanuel’s case, while regrettable in the extreme, does not in its eyes approach the stark circumstances necessary to grant the powerful remedy of asylum.

Implicit in the Home Office position is a recognition that asylum cases are plagued by a lack of third party verification or other independent evidence; it is generally the word of Amanuel as to the degree of his and his families’ difficulties with the government that are at the heart of his case. This is a legitimate concern but not an insurmountable barrier in the present application.

This observation is made in the notwithstanding the patent illogic of elements of the Home Office position. The most obvious of these are:

(i) The Ethiopian governmental ability to keep records is not proof of anything; if an enemy of the state were detained in contravention of international law, it is logical that the prisoner not be listed on an official record

(ii) Amanuel went looking for trouble by attending the police station, yet his pursuit of a complaint is evidence that Ethiopia provides a meaningful complaints process to its citizens

(iii) The apparent acceptance of ‘normal police activity’ in Ethiopia as including a beating or threats of physical violence

However, even with such circumstances stripped away from the Home Office position, the totality of the evidence and the conclusion that Amanuel’s’ case falls short of the requisite legal standard cannot be rejected out of hand.

IV. Other Circumstances

This paper establishes that Amanuel’s application must fall within the ambit of current UK refugee law. In the alternative, if he were to be unsuccessful in his application on the basis that the evidence tendered is not sufficiently compelling or it otherwise lacks sufficient third party verification, Amanuel has established that on a humanitarian basis he ought to be permitted a temporary stay on humanitarian grounds.

Taken in totality, notwithstanding questions of sufficiency, there is no question that Amanuel faces a threat to his personal safety if he were compelled to return to Ethiopia. The immediate government response to his in-class opinions concerning the Ethiopian Constitution is powerful evidence in this respect.

V. Conclusion

It is submitted that no single incident as alleged by Amanuel in the present scenario will provide a sufficient factual basis on which a viable asylum application can be advanced under UK law, a jurisprudence that encompasses the relevant provisions of UN and EU asylum law.

When the facts are assessed in totality, it is submitted that Amanuel should succeed with his refugee claim. Whether his action in provoking the local government as discussed were foolhardy is not a disqualification of his claim. A plain and uninterrupted linkage can be made between his political views and the likely harm that will befall him if he must return to Ethiopia.

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Contemporary Issue

The 2007 criminal case of R v Niehus, criticism of a District Court Judge Marie Shaw by State Upper House Member of Parliament Dennis Hood.

Question

Is Judicial Independence jeopardised by State Members of Parliament who publicly criticise the sentencing handed by Criminal Court Judges?

Judicial Independence is crucial to the operation of a democratic society, leaving little debate that an independent judiciary is the “fragile bastion” in our democratic system of government. Thus judges, when presiding over cases, are entirely free from any intrusion or intimidation executed by external forces.

The Westminster System, implemented from Britain, ensures the courts have the confidence of the community and all cases provide an outcome exclusively on merit, as Michael O’Connell, Victims of Crime Commissioner (Appendix 3) states: “The Judiciary shall decide matters due to impartiality on the basis of facts.”

However, questions have been raised whether judicial independence is jeopardised by external forces publicly criticising a judge’s verdict. One such example occurred when State Upper House Member of Parliament, Dennis Hood, publicly attacked District court Judge Marie Shaw’s final ruling in the 2007 criminal case of R v Niehus, prompting an order for her dismissal.

David Swain, Retired Chief Magistrate (Appendix 2) reports, “Judicial Independence is a vital part of the Westminster System.” To guarantee absolute judicial independence and uphold the confidence of the community, the judiciary must have complete separation from both the Legislative and Executive arms of Government, and any other external political forces. Accomplishment of this is achieved in a number of ways; first, Judges are appointed by the Executive arm and dismissed by the Legislative arm, to avert the chance of one arm of Government grasping complete control over the judiciary and Section 72 of “The Australian Constitution Act” (1900) specifies the dismissal of a judge can only occur on two grounds; misbehaviour and incapacity.

Secondly, a permanent tenure is provided, on the grounds a judge must retire at the age of 70, with the exception of Family Court Justices, who have an obligation to retire at 65. This assures judges cannot be removed if their decision does not support the government’s request, as Peter Hasket, Retired Magistrate (Appendix 4) states, “Even if a number of people don’t want them, their position stays the same.” Thirdly, a fixed remuneration is guaranteed, preventing both salaries from being diminished throughout tenure and manipulation occurring. However, salaries can be increased by government on objective factors.

Fourthly, judges are ensured judicial privilege, allowing them to have freedom of speech while presiding on the bench and delivering verdicts. Thus judges cannot be threatened by criminal prosecution or sued for vilification, a fact David Swain (Appendix 2) suggested “one can take comfort in.” Finally, individuals who are selected for judicial office must have suitable training and credentials in the law, and no discrimination is to occur on the basis of sex, colour, race, status, religion or political influence.

The Honourable Justice John Basten- Judge of the Supreme Court New South Wales (2005:1) reports, “Principles of open justice play an important part of our courts.” Justice is governed in an open court, where the public has complete access, although exceptions occur, for example, courtrooms can only provide for a small number of spectators. Furthermore, for those who do not attend, sentencing remarks are available via the Internet, and significant cases are usually covered in the print and electronic media.

This then ensures openness, as it is vital in promoting the public’s confidence. However, information handed to the public via the media raises questions to the extent of its reliability. David Swain (Appendix 2) reports, “99% of all cases, which go through the courts don’t get any media attention.” This indicates that the media has one priority, which is to attract public attention and have general appeal, in order to sell papers. As well as this, The Honourable Justice John Basten (2005:1) states, “reporters who cover trials often move from one court room to another during the course of a day, obtaining only an incomplete picture of what is happening in any particular case.”

Along with media attention, public criticism is also created. “Sentencing reflects the views of the community, because in effect, they are prescribing parliament’s will,” states Michael O’Connell (Appendix 3). However, it is impossible to please all citizens, thus generating criticism of certain cases, usually through the media. A recent significant case, which generated much public criticism and uproar, was the 2007 criminal case of R Vs Niehus, ruled by District Court Judge Marie Shaw. Dennis Hood, publicly attacked her final ruling, and called for her removal due to the leniency of her suspended sentence. Dennis Hood (2007:1) questioned, “What possible reason can there be to allow Judge Shaw to continue to hear cases and hand down grossly inadequate sentences to hardened criminals?”

Christopher Michael Niehus received a three-year suspended jail sentence, upon the condition that he entered a bond of $400 to uphold good behaviour for a two year period and perform 150 hours of community service, in respect of four counts of unlawful sexual intercourse. Marie Shaw (2007:3) states, “the matters which favour suspension to which your counsel has referred, are that you are a person of previous good character, you are someone who, both before these offences and subsequently, has engaged in age appropriate relationships.

In my view, you are unlikely to offend again.” Marie Shaw’s position as District Court Judge, entitles her to consider all facts and circumstances and provide an outcome exclusively on merit, which she has confidently done. However, Dennis Hood completely disagreed with Marie Shaw’s suspended sentence, complaining to the media that, “abusing a young girl, a 14-year-old girl” resulted in “a sentence of 150 hours of community service.” Denis Hood’s actions of publicly calling for Marie Shaw to be dismissed raised the question to the extent of criticism, which should be allowed without the risk of jeopardising Judicial Independence. David Swain (Appendix 2) states, “Every now and again one or two people, particularly politicians, turn to their favour, and politically ‘go too far,’ which can arguably be an attack on independence.”

Beneficial criticism of the Judiciary is welcomed and appropriate as it allows public scrutiny and maintains the confidence of the community through integrity. As well as this freedom of speech in our democracy is a fundamental right. Nevertheless, as Michael O’Connell (Appendix 3) states, “the criticism, as in any situation, should focus on the issue, not the individual,” Denis Hood’s public ‘out-burst,’ was directly aimed at Judge Marie Shaw, ultimately causing considerable distress and embarrassment, Marie Shaw (2007:1) states,” I was bitterly disappointed that he attacked my fitness for office on the basis of inaccurate statements.”

Soon after Dennis Hood’s public ‘outburst,’ leading judges raised alarms that Judicial Independence was under fire. Chief Justice John Doyle and Chief Judge Terry Worthington stated, “Mr Hood’s push for her removal is contrary to constitutional principle and threatens to undermine the judiciary’s independence, also that any attempt to remove a judge could lead to inappropriate pressure on judges to operate in a way acceptable to politicians and any threat to remove a judge from office because of criticism of a judge’s decision sets a dangerous precedent and who will be threatened next?”

Despite maintaining the integrity of its independence, the judiciary understands it will never be immune from public criticism, as it is an essential component of our democratic system of government. David Swain (Appendix 2) states, “The judiciary is in the same position as any other public institution. It must expect, and should be prepared to deal with, criticism.” However, reforms need to be made in Marie Shaw’s case, where public criticism was undoubtedly incorrect and taken to a level, which may have jeopardised her independence.

Any public criticism, of any arm of government, should always be of benefit to that arm of government. The criticism must purely be aimed at the issues involved and never a direct attack on an individual. In regards to certain views of ‘soft sentences,’ by politicians as such, the official method of parliamentary review should be employed, not via media outlets. As well as this Michael O’Connell (Appendix 3) states, “(I) rely on victims’ views. In general, victims who contact me feel that the sentence imposed was too lenient- in other words, they expected a harsher sentence.”

I am confident that the question posed: ‘Is Judicial Independence jeopardised by State Members of Parliament who publicly criticise the sentencing handed by criminal court judges?’ can be answered in the negative. Dennis Hood’s public ‘outburst,’ was certainly demoralising for Her Honour Judge Shaw, which moved Hood to apologise and retract his statements. Dennis Hood stated in his public apology, “I recognise that by making these assertions I have caused considerable distress and embarrassment to Judge Shaw.” Although the criticism was unjust, Michael O’Connell (Appendix 3) reports, “it will not affect the general sentencing practices.” Our Attorney-General often comments that, “courts in common law countries have been independent of the Parliament since the 1600’s.”

Our current sentencing system works effectively in Australia. There should be no need to make any reforms to the current system as any changes may in fact place the community’s trust in the overall system at risk. Our current judicial practices must be preserved to ensure that judges and the overall judicial system are preserved and the so called “Fragile Bastion” is at all times protected.

Judges are accountable for their overall actions and the decisions that they make. The issue is that parliamentarians need to be careful that when criticising judges it is done lawfully. As it was clearly stated by David Swain (Appendix 2), “The sentencing process is conducted in a manner that does reflect the values, morals and concerns of the community.” We need to trust in our current structures of being able to maintain Judicial Independence and preserve the community’s confidence in the legal system.

Bibliography
22/11/2007, ‘Remove judge, urges Upper House MP’, ABC News, viewed 24/04/2008 http://www.abc.net.au/news/stories/2007/11/22/2098109.htm
Bailey, Geoff, ‘Legal Studies Key Ideas Stage 2?, Adelaide, 2006
Bash, Barbara, ‘Legal Studies Essentials SACE 2?, Adelaide Tuition Centre 2008
Basten, John 2005, ‘Court and Media Relationships’, viewed 26^th April 2008, http://www.lawlink.nsw.gov.au/lawlink/Supreme_Court/11_sc.nsf/pages/SCO_basten301005
Dowdell, Andrew, Henderson, Nick, 23/11/2007, ‘Attorney-General, rejected calls to sack District Court Judge’, ABC News, viewed 23/04/2008 http://www.news.com.au/adelaidenow/story/0,22606,22803291-5006301,00.html
Doyle, John, 22/08/2003, ‘Judicial Independence and the Separation of Powers’, viewed 15/05/2008, http://netk.net.au/SA/SA16.asp#TopOfPage
Hasket, Peter, 13/05/2008, Notes from interview
Hood, Denis, 05/05/2008, Notes from interview
‘Judicial Sentencing’, 22^nd November 2007, Extract from the Legislative Council Hansard, viewed ’10^th May 2008
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Shaw, Marie, ‘R v Christopher Michael Niehus Sentencing Remarks’, District Court, Adelaide, 2007
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Swain, David, ‘Are Judges Truly Independent?’, viewed 6^th May 2008
Swain, David, ‘Do Sentencing Laws Reflect Community Attitudes and Values’, viewed 6^th May 2008

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Critically evaluate, with reference to relevant case law and statute, how far this statement accurately reflects the current law relating to lifting the veil of incorporation.

Introduction

Salomon v Salomon ^[1] involved the principle of separate corporate personality. This states that as a general rule a limited company’s shareholders are not liable for the company’s debts beyond the nominal value of their shares^[2]. However, in certain situations courts have ignored this principle^[3]. Courts have done this under statute, during wartime, where there is an agency or trust arrangement, where the company was a sham, or when dealing with groups of companies. Recent decisions such as Adams v Cape Industries plc^[4] and Prest v Petrodel Resources Ltd^[5] have reaffirmed the principle in Salomon. However, courts have still been willing to ignore the Salomon principle, most notably in Chandler v Cape plc^[6].

Salomon v Salomon

Salmon v Salomon is an important case, as it established the principle that a limited company has a separate legal personality from its members. This is enshrined in s.74(2) Insolvency Act 1986, which states that in a company limited by shares, no member (or shareholder) is liable for any of the company’s debts other than the amount (if any) on any unpaid shares. This is a great incentive for investors, who know that even if a limited company in which they own shares, owes millions of pounds in debts, their own personal assets are safe^[7].

In Salomon a sole trader incorporated his business into a limited company. When the company failed, the liquidators argued that Salomon and the company were effectively one and the same. However, the House of Lords said that the company was a legal entity distinct from its members. Therefore, Salomon himself was not liable for the company’s debts. This separation between members and company is called the ‘corporate veil’.

Corporate personality means that a company can sue and be sued in its own right and be a party to contracts, and exist after the death of its shareholders^[8]. This was recognised by the House of Lords in VTB Capital v Nutritek Intl Corpn^[9] where Lord Neuberger said: ‘A company should be treated as being a person by the law in the same way as a human being.’ Therefore, the Salomon principle remains an important part of corporate law today.

Lifting the veil

However, there are several exceptions to this principle. In these cases courts ‘lift the corporate veil’ to make members liable for the actions of the company^[10]. This undermines the notion that Salomon occupies the centre stage in corporate law today.

Statute

s.213 Insolvency Act 1986 states that if, while winding up a company, the company’s business is carried on with intent to defraud the company’s creditors, a court may order any person knowingly carrying on the business to contribute to the company’s assets. This goes against Salomon, as it holds the company’s members responsible for its debts. However, it requires evidence of dishonesty^[11]. This is difficult to prove.

s.214 Insolvency Act 1986 states that if, while winding up a company, a director ought to have seen that there was no reasonable prospect of avoiding insolvency but continued to carry on business, then a court may hold them liable. There is no need for any dishonesty. However, this only applies to ‘directors’ and not shareholders. Even so, the Companies Act 2006 states that a ‘director’ includes a ‘shadow director’, which includes anyone other than a professional advisor in accordance with whose directions or instructions the directors of the company are accustomed to act^[12]. This could include a parent company if they have direct control over one of their subsidiary companies. Therefore, in a limited way, this restricts the Salomon principle where there is wrongdoing involving the company.

War

Courts may also ignore the corporate veil during wartime. In Daimler Co Ltd v Continental Tyre and Rubber Co (Great Britain) Ltd^[13] a company was incorporated in England but the vast majority of its members were German. The House of Lords stated that whether a company was an enemy in wartime depended upon those who were in control of the company. This goes against the principle of separate corporate personality and weakens the idea that Salomon is always to be followed.

Sham

Courts have also ignored the corporate veil where a company is a sham designed to commit fraud or avoid an existing contractual obligation. For instance, in Gilford Motor Co v Horne^[14] the defendant was a former director of a company who signed an agreement that he would not solicit his former employer’s customers. Instead, he and his wife incorporated another company which he used to breach the agreement. The court held that the second company was simply ‘a cloak, or a sham’ and held the defendant liable.

However, courts will not lift the veil if the company is set up to avoid future liabilities^[15]. Some commentators also argue that these cases do not involve lifting the corporate veil at all. Mayson, French and Ryan state that even if the agency used to commit the fraud or evade the obligation had been another person rather than a company, the result would have been the same^[16]. The court in Gilford recognised this by making orders against both the defendant and the company. If this is correct, these cases do not necessarily go against Salomon v Salomon.

Agency

Courts have also ignored the veil where they have found an agency relationship existed. In Re FG Films Ltd^[17] a company sought a declaration that it had made a British film for financial reasons. The court held that in fact the UK company was only the agent for an American company which owned the vast majority of its shares. The UK company also had no place of business and existed only so that the film could be called ‘British’. The court, therefore, lifted the veil.

However, this has been criticised by commentators who note that, if this is correct, a court could infer an agency relationship merely from the act of being a shareholder^[18]. Therefore, this High Court case seems to be wrongly decided, and the House of Lords decision in Salomon remains the higher authority.

Trusts

Courts have also ignored the corporate veil where they have found a trust relationship exists. In Trebanog Working Men’s Club and Institutive Ltd v MacDonald^[19] an incorporated club was charged with selling liquor without a licence. The court held that as the members owned the liquor between themselves, there was no actual ‘sale’, and the club was simply a trustee of the liquor for its members. However, this contradicts an earlier case where the opposite decision was reached^[20], and commentators note that this argument is ‘at best tenuous’^[21]. Therefore, this probably does not undermine Salomon.

Groups

Case law is more contradictory as to whether groups of companies will be treated as another exception to Salomon. In a group, the parent company can own a number of subsidiary companies and still have separate corporate personality from them^[22]. Traditionally, courts have held that this is a legitimate use of the corporate form, and that each company in a group is a separate legal entity^[23]. However, in DHN Food Distributors Ltd v Tower Hamlets LBC^[24], Denning MR in the Court of Appeal held that a parent company and its subsidiaries were a ‘single economic entity’ as the subsidiaries were ‘bound hand and foot to the parent company’, so the group was the same as a partnership. This undermines the Salomon principle.

In Woolfson v Strathclyde Regional Council^[25], the House of Lords disapproved of Denning’s comments and said that the corporate veil would be upheld unless the company was a facade. The DHN case approach has become less popular since then^[26]. Commentators also note that the DHN case is self-contradictory^[27]. Denning refers to the subsidiaries as being ‘bound hand and foot’ to the parent company, which implies the parent has control, but he also says they are ‘partners’, which implies they have equal power. Therefore, it seems unlikely that DHN will be followed in future, especially given the Court of Appeal’s later decision in Adams v Cape Industries plc.

Cases that support the Salomon principle

In Adams v Cape an English company was sued for the actions of one of its subsidiaries abroad. The subsidiary had caused injury to its workers through asbestos exposure. The Court of Appeal held that the parent company was not liable. The court held that the subsidiary was not a facade or sham as the group had been structured that way only to minimize future liabilities. The court also rejected the argument that the subsidiary was an agent for the parent company, as the subsidiary was carrying on its own business. Finally, the court held that there was no general principle that all the companies in a group should always be treated as a single economic entity.

This reaffirms the Salomon principle. In fact the court in Adams stated that DHN could be explained as a matter of statutory interpretation of the regulations regarding compulsory purchases at the time, and hence it did not actually involve lifting the corporate veil. Dignam says: ‘Gone are the wild and crazy days when the Court of Appeal would lift the veil to achieve justice irrespective of the legal efficacy of the corporate structure’^[28]. Therefore, Adams restores the primacy of Salomon v Salomon.

This is supported by the recent Supreme Court decision in Prest v Petrodel Resources Ltd, where a divorced wife claimed shares in houses owned by companies in which her ex-husband was the controlling shareholder. She asked the court to lift the corporate veil and treat her ex-husband and the companies as being effectively the same. However, the court held that the veil could not be lifted without evidence of impropriety. The setting up of the companies had nothing to do with the marriage breakdown. Therefore, the court refused to lift the veil.

Lord Sumption stated that the veil could only be lifted if there was a legal right against the controller of a company and the company’s separate legal personality frustrated that right^[29]. Also, it must be necessary for the court to lift the veil on public policy grounds. Critics have noted that it is very unlikely that these requirements will be met^[30]. Also, although Lord Sumption’s comments were obiter, they have been cited with approval in other cases and are therefore likely to be authoritative^[31]. However, Baroness Hale in the same case did not agree, saying that she believed there were more cases where the veil could be lifted^[32]. Therefore, the judgments are contradictory.

In the end, the court decided that the properties were held on resulting trust for the ex-husband and could be claimed by his ex-wife. This arguably achieves the same thing as if the court had lifted the veil. Consequently, all that can be said is that the case does not rule out ignoring Salomon in cases involving groups of companies.

A new attitude?

Another exception to Salomon involves tortious liability. In Chandler v Cape the claimant had also contracted an asbestos-related disease while working for a subsidiary of the parent company. This time the Court of Appeal held the parent liable in the tort of negligence. The court held that the parent would be liable if the parent and subsidiary were in the same business, the parent had superior knowledge of health and safety in that industry, the parent ought to have known the subsidiary’s system of work was unsafe, and the parent ought to have foreseen that the subsidiary would rely on the parent’s superior knowledge.

This undermines the Salomon principle. However, critics note that Cape had an unusual business organisation where it was deeply involved in the day-to-day supervision of the subsidiary’s health and safety policy. Therefore, the case may turn out to be ‘Cape specific’^[33]. For instance, in a later case with similar facts but concerning a different company, the Court of Appeal refused to hold the parent company liable^[34].

In Chandler Lady Hale also emphatically rejected that this was a case of corporate veil lifting, saying that the parent had instead assumed a direct duty of care for the employee. In view of this, some critics state that the case may not be setting any useful precedent^[35]. However, others view this clearly as veil lifting, regardless of how the court justified this^[36].

These commentators believe that this suggests that the Court of Appeal is now more willing to lift the veil where there is a group of companies and it is in the interests of justice^[37]. However, this was rejected in Adams v Cape. Even so, in Conway v Ratiu^[38] the court again said there was a ‘powerful argument’ for lifting the veil where it ‘accords with common sense and justice’. Unfortunately, this case is per incuriam as it did not refer to Adams v Cape and is probably wrong. Even so, in Lubbe v Cape Plc^[39] the House of Lords were ready to lift the veil in the interests of justice in facts similar to Adams v Cape, as the foreign jurisdiction where the tort occurred was not an appropriate place to try the matter. Therefore, there is authority for lifting the veil when justice demands it.

In following Lubbe, the court in Chandler v Cape achieved justice, as the victims would otherwise have been denied a remedy. This is important where the subsidiary no longer exists or has any assets^[40] or with asbestos claims where the disease may not show up for many years^[41]. The Supreme Court in Prest v Petrodel was also concerned with achieving justice for the claimant^[42], and in the VTB case Lord Neuberger said: ‘it may be right for the law to permit the veil to be pierced in certain circumstances in order to defeat injustice’^[43].

Therefore, it seems that the courts are willing to disregard the Salomon principle in some cases involving personal injury or groups of companies. This seems fair, as limited liability encourages subsidiary companies to take risks, knowing that the shareholders of the parent company in effect get double protection from creditors should anything go wrong^[44]. To hold otherwise would have been to deny justice to the claimant in Chandler v Cape.

Conclusion

The principle of separate corporate personality and the corporate veil recognised in Salomon v Salomon remains central to corporate law despite several challenges. However, there are certain exceptions when the veil will be lifted. Most notably these include under statute, during wartime, and where the company is a sham. It is less likely to be lifted where it is argued that an agency or trust relationship existed between the company and its controller. Where groups are involved, Salomon remains the starting point. However, courts have been more willing to lift the veil recently, especially where personal injury is involved or justice demands it, even if they do not say so explicitly. This seems fair, as otherwise shareholders enjoy double protection.

BIBLIOGRAPHY

Legislation

Companies Act 2006
Insolvency Act 1986

Cases

Adams v Cape Industries Plc [1990] Ch 433 (CA)
The Albazero [1977] AC 774 (HL)
Chandler v Cape Plc [2012] 1 WLR 3111 (CA)
Conway v Ratiu [2005] EWCA Civ 1302 (CA)
Daimler Co Ltd v Continental Tyre and Rubber Co (Great Britain) Ltd [1916] 2 AC 307 (HL)
DHN Food Distributors Ltd v Tower Hamlets LBC [1976] 1 WLR 852 (CA)
Re FG Films Ltd [1953] 1 WLR 483 (Ch)
Gilford Motor Co Ltd v Horne [1933] Ch 935 (CA)
Lubbe v Cape Plc [2000] 1 WLR 1545 (HL)
Re Patrick and Lyon Ltd [1933] Ch 786 (Ch)
Prest v Petrodel Resources Ltd [2013] UKSC 34 (SC)
Salomon v A Salomon & Co Ltd [1897] AC 22 (HL)
Thompson v Renwick Group Plc [2014] EWCA Civ 635 (CA)
Trebanog Working Men’s Club and Institutive Ltd v MacDonald [1940] 1 KB 576 (KB)
VTB Capital v Nutritek Intl Corpn [2013] UKSC 5 (SC)
Woolfson v Stathclyde Regional Council [1978] P & CR 521 (HL)
Wurzel v Houghton Main Home Delivery Service Ltd [1937] 1 KB 380 (KB)
Other Sources
Anon, ‘Case Comment: Chandler v Cape Plc: is there a chink in the corporate veil?’ (2012) 18(3) HSW 1
A Dignam, Hicks and Goo’s Cases and Materials on Company Law (7th edn Oxford University Press, Oxford 2011)
D French and S Mayson and C Ryan, Mayson, French & Ryan on Company Law (27th edn Oxford University Press, Oxford 2010)
J Fulbrook, ‘Chandler v Cape Plc: personal injury: liability: negligence’ (2013) 3 JPIL C135
L Sealy and S Worthington, Company Law: Text, Cases and Materials (9th edn Oxford University Press, Oxford, 2010)
L Stockin ‘Piercing the corporate veil: reconciling R. v Sale, Prest v Petrodel Resources Ltd and VTB Capital Plc v Nutritek International Corp’ (2014) 35(12) Company Lawyer 363
C Taylor, Company Law (Pearson Education Ltd, Harlow 2009)
Footnotes
[1897] AC 22 (HL).
L Sealy and S Worthington, Company Law: Text, Cases and Materials (9th edn Oxford University Press, Oxford, 2010) 51.
A Dignam, Hicks and Goo’s Cases and Materials on Company Law (7th edn Oxford University Press, Oxford 2011) 28.
[1990] Ch 433 (CA).
[2013] UKSC 34 (SC).
[2012] 1 WLR 3111 (CA).
C Taylor, Company Law (Pearson Education Ltd, Harlow 2009) 26.
Ibid 27.
[2013] UKSC 5(SC)
Sealy and Worthington (n2) 51.
Re Patrick and Lyon Ltd [1933] Ch 786 (Ch).
s.251 Companies Act 2006.
[1916] 2 AC 307 (HL).
[1933] Ch 935 (CA).
Adams v Cape Industries Plc [1990] Ch 433 (CA).
D French and S Mayson and C Ryan, Mayson, French & Ryan on Company Law (27th edn Oxford University Press, Oxford 2010) 136.
[1953] 1 WLR 483 (Ch).
Sealy and Worthington (n2) 59.
[1940] 1 KB 576 (KB).
Wurzel v Houghton Main Home Delivery Service Ltd [1937] 1 KB 380 (KB).
Sealy and Worthington (n2) 60.
Taylor (n7) 31.
The Albazero [1977] AC 774 (HL).
[1976] 1 WLR 852 (CA).
[1978] P & CR 521 (HL).
Taylor (n7) 34.
French, Mayson and Ryan (n16) 145.
Dignam (n3) 40.
Para 35.
L Stockin ‘Piercing the corporate veil: reconciling R. v Sale, Prest v Petrodel Resources Ltd and VTB Capital Plc v Nutritek International Corp’ (2014) 35(12) Company Lawyer 364.
Ibid, 363.
Para 92.
J Fulbrook, ‘Chandler v Cape Plc: personal injury: liability: negligence’ (2013) 3 JPIL C138.
Thompson v Renwick Group Plc [2014] EWCA Civ 635 (CA).
Fulbrook (n33) 138.
Dignam (n3) 46.
French, Mayson and Ryan (n16) 150.
[2005] EWCA Civ 1302 (CA).
[2000] 1 WLR 1545 (HL).
Anon, ‘Case Comment: Chandler v Cape Plc: is there a chink in the corporate veil?’ (2012) 18(3) HSW 2.
Ibid.
Stockin (n30) 365.
Para 127.
Dignam (n3) 49.

This work was produced by one of our professional writers as a learning aid to help you with your studies

With reference to the legal rules relating to offer and acceptance of a contract, advise the club whether it can claim the joining fee from Mary, Frank and Ali.

Mary posted her application. She telephoned the club to confirm whether or not her application was accepted but was unable to get through to speak to anyone. In the meantime the committee took two months to confirm whether or not they would accept her application based on a character investigation.

In accordance with the legal stipulations of offer and acceptance Mary is under no obligation to pay her joining fee for a number of reasons. Although she returned her application form the offer of membership was not formally accepted as she failed to contact the club secretary when she was told to telephone. This meant that she wasn’t provided with an answer to the outcome of her application, the time of which was made very clear in terms of when she needed to do this by yourselves. Legally ‘an agreement is reached when an offer by one party is unequivocally accepted by the other’.

Which did not occur. You do not confirm whether the club actually wrote to Mary in September when the decision was made to accept her. If this was not done and payment was merely requested on the basis that Mary Jones had been granted membership, once again she would not be liable as Australian Law dictates that a person cannot accept an offer of which he/she has no knowledge. And considering the club waited over two months to inform Mary, she had no understanding that she had ever been considered in the first place. Additionally silence cannot be construed as acceptance.

The club was not within its rights to assume that Mary would accept the offer, having failed to communicate with them by telephone and not receiving confirmation until several months after the membership cut-off date. In the English case of Felthouse and Bindley, the courts ruled against Felthouse who had considered the horse he had acquired for his own, on the basis that his Nephew had not written to confirm otherwise. He lost the case because the court confirmed there had been no acceptance of a contract.

Frank’s case is similar in that he never contacted the club secretary to confirm his membership, therefore no official acceptance was made. In addition he had stipulated in writing that his terms of agreement were related to gaining a contract of work from the club. Because this written condition was not agreed to, Frank was within his rights not to have to pay for membership. Additionally and somewhat ironically correspondence with offer, or the ‘mirror image rule’ states that if you accept an offer it must be accepted exactly as it is offered, without any modifications. This being the case Frank’s offer had already turned into a null and void counter-offer as soon as he wrote the condition of interest, on the understanding that he would receive a contract of work by way of membership.

The “mirror image rule” states that if you are to accept an offer, you must accept an offer exactly without any modifications; if you change the offer in any way, this is a counter-offer that invalidates the original agreement.

Once again no formal agreement has been instigated by Ali as he failed to contact the secretary to discuss or accept membership. He would have assumed that his membership was disregarded as it was late and he never received written confirmation.

However his assumption of failure to be invited to membership may not be enough in terms of rendering Ali not culpable. When he posted the letter he was in effect accepting the offer. Likewise although the letter of agreement never found its way to him it was physically sent by the club. Ali also followed up his request to apply for membership over the telephone, thus legitimizing his desire to join.

By law if an offer is accepted by post, the contract becomes valid at the time it was posted. As with the well documented case of Adams v Lindsell, which determined that a posted acceptance is contractually binding. But it did arrive after the stated and agreed deadline which would no doubt make him non eligible for payment of membership fees.

Suppose that Tony is determined to take Court action and is looking for cases to support his arguments. Identify ONE case that may help support Tony’s demands that he be accepted as a member to the club and explain to him, with reasons, how a Court in your state of Australia is likely to treat this previous case. As part of your answer you should discuss what parts of the case are important and what parts are not.

With regard to your contesting the outcome of the Tennis Club to accept you as a member. Bearing in mind that you sent your letter well within the deadline date for which membership would be considered; only to be refused on the basis that your application arrived late due to a postal strike, there may be a case for us to adopt the approach of the Postal Acceptance Rule.

This is an exception in law to the principal that the offeree (In this case yourself) communicates your acceptance to the Offeror. (The Country Tennis Club). In this instance acceptance is granted when the letter stating acceptance is actually posted and

not when it is received by the offeror. The most famous case for determining this law was by way of Adams vs Lindsell in 1818. Lindsell (the defendant) wrote to Adams (the plaintiff) to make him an offer of some wool and asked for an agreement for this sale to be issued by return of post which Adams provided.

However Lindsell’s original letter arrived late as he managed to address it incorrectly. Thus Linssell automatically assumed that his offer had been rejected having waited so long for a response. He consequently decided to sell the wool on to another buyer. The problem arose as this exchange took place after Adams had already replied to say that he would indeed buy the wool and he was expecting to receive it.

The court in this case ruled in favour of Adams and it was deemed that the date of agreement was made from when he posted the letter back requesting the wool and not when it arrived, which was in this case too late.

This has a striking resemblance to your own situation. The court imagined that this would elevate the issues concerned when each individual is waiting for a receipt of confirmation, which can hinder business. The law has been criticized for having ulterior motives that were connected with publicizing the post office in the nineteenth century, although it does seem feasible that it was a law passed to aid the practicalities of business efficiency. But it does place the offeror in a vulnerable situation as they are often bound by contract without even being aware of it.

This is not a completely straightforward law as it does only apply to acceptances and no other type of communication and only where it is reasonable that this acceptance needs to be made by post. This makes a good case for you against the club as you were responding to their requests. Saying that this particular rule can always be displaced by the offeror if they request that the offer takes a specific form, for example a speedy reply or a deadline, which means it cannot take effect on arrival as the deadline has passed. Which makes your case unfounded. However what is stipulated in this law as reiterated in the case of Henthorn v Fraser

‘Where the circumstances are such that it must have been within the contemplation of the parties that, according to the ordinary usages of mankind, the post might be used as a means of communicating the acceptance of an offer, the acceptance is complete as soon as it is posted’

is the need for the offeror to consider what is reasonable to expect in the case of making an offer available. In other words it is very conceivable that the Tennis club will be liable by way of neglecting to take into consideration the potential disruption or inevitable delays that might arise through the postal system or any extenuating circumstances whereby the application might be received slightly later than anticipated. Because the Tennis Club failed to put in place these obvious influencing factors they should by law be obliged to provide you with the membership that you applied for within the designated time given.

3). Suppose that the Club’s constitution provides that “any member who fails to pay any money owed to the club promptly and in full will be subject to imprisonment on the premises for six days for each offence and during this time must scrub the kitchen with a toothbrush”. Assuming Mary refuses to pay, can the club enforce this provision of its constitution against her? Why or why not? (30 marks)

No Mary would not be subjected to this type of punishment as she is not officially a member of the club and the constitution clearly states ‘any member’. She has not officially accepted membership therefore she is not liable to carry out the actions requested.

A constitution in this sense establishes the laws and principles of the club itself which do not infringe on the external it reflects a temporary law or measure which has little power in the external world around its governing area. In this case the club constitution is limited to the confines and members of its club.

A constitution is defined as ‘a set of rules which governs an organsation. Every organization, whether social club, Trade Union or nation state, which has defined objectives and Departments or offices established to accomplish those objectives, needs a constitution to define the powers, rights and duties of the organizations members’

In a club, such as the Country tennis Club members have to obey the laws and house rules as laid down in the constitution. But only as members of the club. The extent by which the members are controlled is dependent on the constitution. What it does not have is the power to force its members to carry out things against their will.

As with any constitution, it can discriminate and create its own internal laws which might have an affect on those trying to seek membership. It represents an internal oligarchy that control their own small governing group which has no legal standing in terms of enforcing its own rules directly onto external individuals, although this may be indirect as mentioned before in terms of prejudice or discrimination against those people it wants as its members and those it chooses not to accept.

In addition the nature of this constitution, regardless of its company policies and rules it is infringing on civil and human rights issues. The fact that the Tennis Country Club constitution expects degrading and humiliating activities to be performed by its members is both unacceptable and contravenes a number of laws. Examples of some of these laws in Australia include those thought to encourage Societal Abuses and Discrimination, The Right of Association.

The law also provides all workers and public servants with the right of association domestically and internationally and protection ‘against antiunion discrimination, and workers exercised these rights in practice’ One point to note is that Australia has no Federal Bill of Rights. However it does have one of the best human rights records in the world.

So even if Mary was for some reason expected to make payment for her club membership and then refused, even if membership had been granted, yet not accepted. Under any of these extenuating circumstances she would be well within her rights to report the club for at the least anti-social behavior, at worst for crimes against human and civil rights.

Bibliography

Tillotson, J.Contract Law in Perspective: Routledge; 1995

Suff, M. Essential Contract Law: Cavendish Publishing; 1997

Nixon, A, Wolstenholme Holland, R.Commercial Law: Longmans, Green and Co; 1907

Frey, M.A, Hurley Frey, P. Essentials of Contract Law: Thomson Delmar Learning; 2000

Stone, R. The Modern Law of Contract: Routledge Cavendish; 2005

Stone, R. The Modern Law of Contract: Routledge Cavendish; 2005

Stone, R.The Modern Law of Contract: Routledge Cavendish; 2005

Barnett, H.Constitutional & Administrative Law: Rutledge Cavendish; 2004

Harriman, E.A.The Constitution at the Cross Roads: A Study of the Legal Aspects of the League of Nations, the Permanent Organization of Labor and the Permanent Court of International Justice: The Lawbook Exchange, Ltd; 2003

Australian Human and Civil Rights. Available at: http://home.vicnet.net.au/~victorp/vphuman.htm Accessed August 26, 2008

This work was produced by one of our professional writers as a learning aid to help you with your studies

“In view of a justification defence to both direct and indirect discrimination, the law will continue to do little to prevent age discrimination.” Critically evaluate this statement as a reflection of the current position of the law in this area.

Date authored: 21 ^st July, 2014.

The current law on discrimination is laid down in the Equality Act 2010. Age is one of the protected characteristics within the Act. [1] The term ”Age” refers not only to a person’s age, but also to persons in a particular age group.[2] The Equality Act stipulates that direct discrimination occurs where a person treats less favourably another due to the latter’s protected characteristic. [3] Thus, there must be a comparator to compare with. If one does not exist, the court would create an imaginary comparator. The comparator must be in the same or not in a materially different position from the plaintiff in all aspects with the exception of being a member of the protected class.[4] The comparison exercise must be reasonable. [5] The Tribunal applies an objective test for less favourable treatment.[6] Indirect discrimination can be claimed where there is an ostensibly neutral provision, criterion or practice which indirectly discriminates against the claimant. [7] The indirect discrimination provisions are aimed to tackle ”disguised age barriers” rather than barriers stemming from retirement. Thus, the fact that an individual cannot obtain a qualification needed for a promotion before retirement does not mean that he has been discriminated against. [8]

In contrast to other forms of direct discrimination, direct age discrimination can be justified. Although the motive for discriminating is irrelevant, [9] the employer could raise a defence that the discriminatory acts were proportionate means of achieving a legitimate aim. [10] Legitimate aims and proportionality are distinct issues which must be examined by separately by the Tribunal.[11] Indirect discrimination is justified using the same principle. The Tribunal must strike an objective balance between the discriminatory effect of the provision and the reasonable needs of the business. There must be a need for the provision and it must be reasonably necessary. [12]

The peculiarities of age as a protected characteristic should be pointed out. Age discrimination includes a wide range of objective justifications unlike sex discrimination where there are very few and race discrimination where there are virtually none. This is logical given the fact that age discrimination is related to many complex issues such as retirement, business needs or working culture. Such peculiarities superficially imply that in most occasions, the employer’s policies would be justifiable and age discrimination claims should be a response only to the most heinous conduct. Even though direct discrimination claims are becoming a rare phenomenon as most companies have developed solid equal opportunities policies and training, there have been several recent direct age discrimination cases where managers have made discriminatory remarks in view of the employee’s performance. [13] Furthermore, a 2012 DWP report pointed out that age-related assumptions and stereotypes are still prevalent in the UK. [14] Thus, a careful balancing act between the employer’s legitimate aims and the severity of the discriminatory measure is prudent.

The background of the current legislation should also be considered. The Equality Act 2010 is a consolidating legislation, replacing the provisions of the Employment Equality (Age) Regulations 2006 which implemented the Equal Treatment Directive. In that regard, the objective justification defence is a recognised concept in EU Law. InIncorporated Trustees of the National Council on Aging v Secretary of State for Business, Enterprise and Regulatory Reform (the Hayday case) [15] The European Court of Justice acknowledged that it is acceptable to derogate from the provisions of the Equal Treatment Directive [16] relating to age discrimination in situations where there are legitimate public interest objectives. The means of implementing the objectives must be appropriate to the aim and reasonably necessary for its achievement. [17] The Court has recognised legitimate objectives such as inter-generational fairness and dignity. A policy, criterion or provision which is justified based on staff retention and workforce planning meets the inter-generational fairness objective. Avoiding the necessity to dismiss older workers on the basis of incapacity or underperformance has been directly related to the dignity objective. Avoiding the need for expensive and divisive disputes about capacity and underperformance would also meet said aim. However, it is recognised that direct and indirect age discrimination cannot be identically justified. [18]

Age Discrimination and Retirement

An example of a discriminatory but justifiable provision is a legislation permitting compulsory retirement on the ground of age. The European Court has held that said legislation was necessary for checking unemployment and encouraging recruitment. [19] A compulsory retirement clause for partners in a law firm has also been justified on the grounds that it allowed associates of the firm the opportunity of partnership after a reasonable period; facilitated the planning of the partnership by having a realistic long term expectations as to when vacancies would arise; and limited the need to expel partners by way of performance management, which contributed to the collegiate environment within the firm. [20]

In Harrod v Chief Constable of West Midlands Police the authority applied a compulsory retirement provision within the Police Pensions Regulations 1987 to force a large number of officers to retire. Generally, a discriminatory practice is not justifiable on the basis of cost but may be justified on the basis of efficiency. However, the distinction between the two can sometimes be blurred. Improving efficiency was accepted by the Tribunal as a legitimate aim. However, the measure was disproportionate. The discriminatory practice was applying the Regulation to all officers only because they were within its ambit. There were other less discriminatory alternatives such as voluntary retirements, part-time working and career breaks, which were not considered.[21]

In Bloxham v Freshfields Bruckhaus Deringer[22] the Tribunal held that Bloxham had been treated less favourably than partners aged 55 or over as, being only 54, he was subject to a 20 per cent reduction. However, modification of the pension scheme to make it more financially sustainable and fairer to younger partners was held to be a legitimate and necessary aim and the firm had successfully demonstrated that the amendments were a proportionate means of achieving this aim.

Access to Employment

Another example of a justifiable policy is restricting a job position to applicants over a certain age. [23] This constraint may be reasonable considering the requirements of the job in question. In the same spirit, the Equality Act recognises an exception to some of its provisions [24] relating to promotion and access to employment if the employer can demonstrate that age is an occupational requirement and that said requirement is a proportionate means of a achieving a legitimate aim. [25] This is particularly relevant for professions within the film or sports sectors.

Enhanced Redundancy Payments

The Equality Act permits employers to consider age as a factor when deciding whether to make an enhanced redundancy payment. [26] Although such practices may be prima facie discriminatory, there have been many cases of recognised justifications. For example, a redundancy scheme whereby payments are raised depending on age and length of service was held to meet legitimate aims.[27] Such aims were: encouraging loyalty, supporting older workers who are more vulnerable in the job market and providing an incentive to older workers to volunteer for redundancy, which would free senior posts for younger employees. In another example, the employer, DWP, justified an enhanced payment for older employees as part of a scheme by presenting evidence which demonstrated that older employees were unemployed for a longer period of time and had more family and financial responsibilities.[28] The aim of the enhanced payment policy was to provide proportionate monetary support until the employee finds other employment or retires. The court recognised that even though the scheme could have been made non-discriminatory at no extra cost by reducing the payments, this did not render the scheme disproportionate. This implies that there is no requirement that it is absolutely necessary to take into account whether there are alternative, less discriminatory measures. It was also recognised that due to the nature of the scheme, the individual circumstances of the claimant could not be taken into account. The caveat is that such subtleties may serve as a carte blanche for employers to discriminate on the grounds of age.

Dismissal due to Age

Although in both direct and indirect discrimination the Tribunal employs the same test, following Seldon v Clarkson Wright and Jakes [29] the employer must demonstrate a social policy aim not merely a private business aim to justify direct discrimination. Because of the more severe nature of direct discrimination, it is not illogical to argue that more scrutiny should be placed on the legitimacy of the employer’s objectives and the proportionality of its measures.

In O’Reilly v BBC[30] the plaintiff was successful in her claim for age discrimination. The company dismissed her in order to change the image of the Countryfile program to appeal to a younger audience. The tribunal acknowledged that this was a legitimate aim, but it held that the measure was disproportionate as it was not necessary to replace the plaintiff with younger presenters to achieve the aim. Similarly, in McCririck v Channel 4 Television Corporation [31] the claimant was dismissed in order to change the image of the program. An important distinguishing point in that case was that the defendants conducted a research exercise which identified negative views associated with the claimant’s image and character. No such research was carried out in O’Reilly. Moreover, Channel 4 considered the plaintiff’s personal qualities, particularly his reputation as holding old-fashioned views, which were indirectly linked with his age. [32] The Tribunal concluded that the defendants have used proportionate means.

An interesting point is that in McCririck, the decision to dismiss was justified by evidence and based to a larger extent on the plaintiff’s style and to a lesser extent on his age. In contrast, in O’Reilly, the decision was based primarily on the stereotype that the plaintiff could not appeal to a younger audience because she was older. This serves as an example of a situation where the law should intervene to protect the employee from counterproductive stereotypes which may, in certain situations, by disguised under neutral, ubiquitous policies.

In conclusion, the cases examined demonstrate the wide array of justifications within different contexts. Some of the justifications appear to be specific only to age discrimination. Objectives such as dignity may be unnecessarily vague particularly against the background of a company policy or scheme where the employee’s individual’s circumstances are seldom a relevant consideration. Justifications such as avoiding the need for costly and divisive disputes can be controversial in light of the potential harm suffered by the plaintiff. Medical research by Florida State University College of Medicine demonstrated that older people who perceive age discrimination experience lower physical and emotional health than people who perceive sex or race discrimination.[33] In that regard, cases such as O’Reilly and McCririck represent an illustrative example of the very thin line between a proportionate measure based on evidence and a measure based on stereotype.

Word Count: 1774

BIBLIOGRAPHY

Books

Bell, A; Employment Law (2^nd edn; Sweet & Maxwell, London 2006)

Honeyball, S; Honeyball & Bowers’ Textbook on Employment Law (11^th edn; Oxford University Press, Oxford, 2010)

Slewyn, N; Selwyn’s Law of Employment (16^th edn; Oxford University Press, Oxford, 2011)

Online Resources:

The Lawyer, ‘Age Discrimination Time for Revision’ http://www.thelawyer.com/download.aspx?ac=68830 accessed 20 July 2014

Legal Week Law, ‘ More than just a number – three key age discrimination lessons from recent cases ‘ http://www.legalweeklaw.com/download/-key-age-discrimination-lessons-recent-20289 Legal Week Law accessed 20 July 2014

Richard Lister, ‘Channel 4 dismissed John McCririck because of style, not age’ [2013] Lewis Silkin http://www.lewissilkin.com/Knowledge/2013/December/Channel-4-dismissed-John-McCririck-because-of-style-not-age.aspx#.U8w07vumXlQ accessed 20 July 2014

Table of Statutes

EC Directive 2000/78/EC

Employment Equality (Age) Regulations 2006

Equality Act 2010, c.5, c.13, c. 13(2), c.19,

c. 39(1) (a); c.39 (1) (c); c.39 (2) (b); c. 39(2) (c); Schedule 9, paragraph 1; Schedule 9, paragraph 13

Table of Cases

Bloxham v Freshfields Bruckhaus Deringer ET 2205086/2006

Clements v Lloyds Banking plc UKEAT/0474/13/JOJ

Eweida v British Airways [2010] EWCA Civ 80

Homer v Chief Constable of West Yorkshire Police [2010] EWCA Civ 419

Incorporated Trustees of the National Council on Aging v Secretary of State for Business, Enterprise and Regulatory Reform (the Hayday case ) [2009] All ER (EC) 619

James v Eastleigh BC [1990] 2 AC 751

James v Gina Shoes Ltd UKEAT/0384/11/DM

Lockwood v Department of Work and Pensions [2013] EWCA Civ 1195

MacCulloch v ICI plc [2008] ICR 1334

McCririck v Channel 4 Television Corporation ET 2200478/2013

O’Reilly v BBC ET 2200423/2010

Network Rail Infrastructures v Gammie (EAT (Scotland), 6 March 2009)

Palacios de la Villa v Cortefiel el Servicios SA [2008] All ER (EC) 249

Seldon v Clarkson Wright & Jakes [2012] UKSC 16

Shamoon v Chief Constable of the Royal Ulster Constabulary [2003] UKHL 11

Smith v Safeways Stores [1996] IRLR 456

Wolf v Staldt Frankfurt am Main [2010] IRLR 244

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The test which has become enshrined in law as the benchmark by which medical negligence is assessed follows the 1957 ruling in the case of Bolam v Friern Hospital Management ¹. Referred to since simply as the Bolam test it determined that a member of the medical profession will not be guilty of negligence if he or she exercised reasonable care in accordance with a practice accepted as proper by a responsible body of medical opinion. Therefore in order to satisfactorily defeat a claim of clinical negligence under Bolam a healthcare professional is required to do nothing more than adduce evidence from the respected peers from his or her speciality who agree with the standard of practice which is the subject of the action. This means that a defendant doctor will not be deemed to have been at fault providing his or her course of action is one that is professionally backed by colleagues despite the fact that other members of the medical may take an opposing view. This essay will examine the effect of Bolam and address the question of whether its precedent represents a relic from a bygone era which no longer has a place in a modern legal system or whether it adequately serves society by striking a necessary balance between the medical profession and the patients to whose care they are entrusted.

One of the main drawbacks of the Bolam test is that it gives legal sanction to a self-regulatory system that operates for the benefit of clinicians in that it is the medical profession themselves and not the courts that decide the yardstick by which reasonable practice is measured. In a departure from its usual role as arbiters of what proper standards of care should be the courts are consequently relegated to a passive, acquiescent role compliantly rubber stamping medically determined definitions of reasonable clinical practice. Bolam also provides a cloak of protection around medical practitioners in that it places an often insurmountable challenge on claimants to show that no responsible body of professional opinion exists that would advocate the course of conduct under question. Although doctors may take the view that the course of action being considered may not have been one that they would themselves have adopted they may feel reluctant to go further and go on record to officially opine that the conduct of a colleague was actually below the levels that should be expected. This obstacle to proving liability inevitably acts to discourage claimants from pursuing cases and renders it highly problematic for legal practitioners to advise on the likely success of the claims in those that do.

When examining the power and control Bolam affords the medical fraternity it perhaps comes as no surprise that its ruling came only nine years after the birth of the National Health Service when the appointed omnipotence and lofty pedestal upon which doctors were placed by a grateful public was at its highest and was reflected by judicial attitudes that viewed the risk of medical negligence as“a dagger at the doctor’s back” ². Bolam itself involved damages claimed for the injuries sustained by a patient during electro-convulsive therapy for the treatment of mental illness, a remedy which itself fell into serious disrepute and viewed as outmoded since the 1970’s. ³ It set the legal standard during a period in which the conduct of doctors went largely unchallenged and was automatically judged to be motivated by medical goodwill and professional integrity. ⁴

Post Bolam society has gradually undergone a radical and fundamental change with a wealthier and more educated and informed public and a doctor / patient relationship which has broadly transformed from that of humble appreciation to one of high demand and expectation. ⁵ Following a shift change towards a rights based society and the promotion of core values protecting the individual right to fair and just treatment the public increasingly expect a consistent and proper method of redress and regulation when systems are shown to have failed them. High profile and shocking scandals involving the corrupt, dishonest and even criminal behaviour of medical practitioners have also acted to massively shake public confidence and trust in a body of professionals previously presumed to operate only with the highest principles of morality and virtue. These include serious cases such as those of notorious murderer Dr Harold Shipman, Dr Andrew Wakefield who published a fraudulent research paper falsely claiming a link between the MMR vaccine and the appearance of autism and bowel disease, gynaecologist Rodney Ledward who was struck off for a number of offences including poor quality of clinical care and carrying out unnecessary medical procedures and that of Richard Neale another gynaecologist found guilty of failing to provide appropriate care to patients and lying about his qualifications. ⁶

In the four decades that followed Bolam its prerogative was largely unchallenged with any endeavours by the lower courts to expand on its principle proving futile and leading to a swift overrule and reinstatement by the House of Lords that the standard of care to be decided was a matter for medical judgement.⁷ However in the late 1990’s just prior to the introduction of the Human Rights Act 1998 and perhaps following a recognition of changing public attitudes and the erosion of deference afforded to the medical profession, the House of Lords examined the central issue of Bolam in Bolitho v City Hackney Health Authority ⁸ and chose to look at the question of whether it is the courts or the medical profession which exercised supreme authority over what amounted to the standard of care demanded of clinicians. In that case their lordships ruled that the medical profession would only escape liability for their actions if the expert witness testimony of peers on which they sought to rely was found by the court to be logical and reasonable. Although the judgement affirmed that the final say was with the courts Lord Browne-Wilkinson somewhat mitigated its force when he stated that it would be rare that the courts would find a competent medical expert to be unreasonable. ⁹

Notwithstanding forecasts for its scarce application Bolitho does allow for the judicial scrutiny of expert evidence rather than mere endorsement and gives the courts authority to prefer the testimony of one body of experts over another. In an examination of case law post Bolitho, McClean ¹⁰ found that the case was sparingly referred to and that the courts still appeared to be more inclined to follow the standard form of Bolam without utilising Bolitho permitted analyses of professional opinion. Mulheron¹¹ however concluded that that Bolitho’s influence could be seen despite the fact that it was not often openly acknowledged. It is worth noting that the logic of expert medical evidence has been directly examined in some cases that have led to findings of negligence where they would previously have been afforded a harbour of sanctuary under Bolam. In Reynolds v North Tyneside Health Authority¹² the court followed Bolitho and held that expert testimony that supported a practice that was untenable lacked a logical basis and accordingly could not be defended.

In Penney v East Kent Health Authority¹³ a case that concerned false negative cervical screen results, the courts ruled on the basis of what the actions of the screener should have been when exercising reasonable care and rejected the defendants’ expert testimony that the slides could have been reported as negative- on the basis that it was inconsistent with public confidence and illogical.

Considerations of public policy have previously played a part in judicial unwillingness to set a more prescriptive standard for doctors out of fears that it will result in overly defensive medicine in that clinicians will avoid getting involved with more pioneering and radical treatments due to fears of litigation. The Medical Innovation Bill championed by Lord Saatchi and currently in the consultation stage seeks to replace the Bolam test on the basis that it actually creates an unnecessary restriction on doctors by preventing them from deviating from normal practice in order to explore and develop new innovative techniques and surgical procedures¹⁴. The Bill which claims to prioritise the best interests of the patient proposes legislation permitting the medical profession to retreat from accepted medical practices in particular circumstances which include the existence of a plausible reason, an assessment of the risks associated with the proposed treatment and a full multi-disciplinary discussion.

The Bill has received a great deal of criticism from the medical profession itself who feel that it is unnecessary and fear that it will compromise patient safety and “encourage quackery”¹⁵. The chairman of the British Medical Association, Dr Mark Porter commented, “At present, the law on medical negligence is framed to deter clinical interventions that might harm patients out of proportion to the potential benefits. The BMA is not aware of any evidence that shows this has stopped innovative and potentially successful treatments being trialled”¹⁶. Whilst medical advances must not be stifled the aims of law surrounding medical negligence litigation must do more than cover the back of the doctor. It is difficult to see how Bolam can be criticised for curtailing medical progress when its test is met merely on the basis of peer support. As argued by Dr Gerard Panting, “Fear of litigation has been cited as the driving force behind defensive medicine. But would that be so bad? If it causes one clinician to seek that views of a second……I, as a patient, am all for that”¹⁷.

The question of determining whether standards of care have been sufficiently reached by members of the medical profession in clinical negligence cases will always be a formidable one for the courts given the undeniably complex and highly technical issues often in question. In an arena where developments are ever evolving and fast paced and concern practices that sometimes defy reliable determinants and cannot always be explained with complete scientific accuracy the answers to legal questions examining the adequacy of levels of care will inevitably heavily depend upon the views of the medical fraternity itself. In such circumstances it is difficult to imagine a fair and just system of medical litigation which does not apply a Bolam type test which accordingly makes it difficult to eliminate. Legislation that provides greater liberty for the medical environment to play God with unregulated experimentation which would unavoidably compromise patient safety seems a backward step and a return to patternalism which is unjustified. Notwithstanding an acknowledgement and sympathy for the complicated and highly specialised topics often faced by the courts in medical litigation Bolam must not be used to allow judges to abdicate responsibility for ensuring that proper standards of care are being followed. If forcefully applied and fully embraced Bolitho represents an opportunity for the courts to apply a healthy check and balance to the vulnerabilities of Bolam and to ensure that it is not used to legitimise and maintain unsound, antiquated or shoddy practices of patient treatment simply on the basis that it is supported by fellow practitioners.

Bibliography

Alghrani A, Bennett R, Ost S, “The Impact of the Loss of Deference towards the Medical Profession” – Bioethics, Medicine and the Criminal Law Volume I (Cambridge University Press 2012)

BMA News “Medical innovation bill allows ‘reckless practice” (15^th May 2014) accessed 1 ^st June 2014

Carr C, Unlocking Medical Law and Ethics (Routledge 2012)

Crossley J, “BMA takes scalpel to Saatchi Bill” (Zenith PI 27^th May 2014) accessed 1st June 2014

Dixon-Woods M, Yeung K, Bosk C, “Why is UK medicine no longer a Self regulating profession? The role of scandal involving “bad apple” doctors” Social Science and Medicine xxx (2011) 1-8

Harpwood V, Medicine, Malpractice and Misapprehensions (Routledge Cavendish 2007)

Lord Woolf “Are the Courts excessively deferential to the medical profession?” (2001) 9 Medical Law Review 1

McCartney M, “Withdraw Saatchi’s quackery bill” British Medical Journal 29^th April 2014

McClean A, “Beyond Bolam and Bolitho” 2002 5 Med L International 205

Mulheron R, (2010) “Trumping Bolam : A Critical Legal Analysis of Bolitho’s Gloss.” Cambridge Law Journal 69, 609-638

Panting G, “Doctors on the defensive” The Guardian (1^st April 2005)

Saatchi M, “We must liberate doctors to innovate.” The Telegraph 26^th January 2013

Stone C, “From Bolam to Bolitho : unravelling medical protectionism” Medical and Legal Limited < http://www.medicalandlegal.co.uk> accessed 27^th May 2014

2013

Table of cases

Bolam v Friern Hospital Management Committee[1957] 2 All ER 118

Bolitho v City and Hackney Health Authority

Hatcher v Black The Times 2^nd July 1954[1997] 4 All ER 771

Maynard v West Midlands Regional Health Authority [1985] 1 All ER 635

Penney v East Kent Health Authority [2000] 55 BMLR 63

Reynolds v North Tyneside Health Authority [2002] Lloyds Rep Med

Sidaway v Bethlem Royal Hospital Governors [1985] AC 871

Whitehouse v Jordan [1981] 1 All ER 267

This work was produced by one of our professional writers as a learning aid to help you with your studies

Consider whether it is time that the Supreme Court declared there to be a tort of invasion of privacy, or whether an individual’s right to privacy is already adequately protected.

Date authored: 7 ^th July, 2014

“We have reached a point at which it can be said with confidence that the law recognises and will appropriately protect a right of personal privacy.”

Sedley LJ in Douglas v Hello! Ltd. (No.1) [2001] 2 WLR 992.

“I do not understand Sedley LJ to have been advocating the creation of a high-level principle of invasion of privacy. His observations are in my opinion no more than a plea for the extension…of…breach of confidence…There [is] a great difference between identifying privacy as a value which underlies the existence of a rule of law (and may point the direction in which the law should develop) and privacy as a principle of law in itself.”

Lord Hoffman in Wainwright v Home Office [2003] 3 WLR 1137.

Before examining how it is regarded and analysed in a legal context, it is useful to ask what the definition of privacy is. That is, what does the concept mean to us on an everyday basis. The Oxford dictionary provides two definitions of ‘privacy’: (1) “ A state in which one is not observed or disturbed by other people” and (2) “The state of being free from public attention ”. When we consider each of these definitions carefully we can understand how, on an everyday basis, a life without any privacy would seem to be inconceivable. Maintaining the privacy of our inner lives allows space for psychological well-being and maturation, for creativity and for the development of intimate and trusting relationships with others. Some have argued that the reason Marilyn Monroe, one of the world’s most famous actresses, committed suicide was because her life was entirely public and exposed. Indeed, this may be argued for many tragic cases of suicide among celebrities or public figures. Our relationship with, and concept of, privacy is changing however.

Privacy is a hot topic today, both in the legal system and in society in general, because of the massive changes in the way we live over the past two decades. It is more and more difficult to be in a state where one is not observed or disturbed by others or where one is free from public attention, because of the widespread intrusion of, for example, mobile phones and smart phones, cameras, videos, CCTV surveillance, GPS, Google Earth and internet cookies (even if we are innocently browsing the internet at home alone, our movements are likely being tracked, monitored and stored). Arguably, one has to go on a technology-free retreat in the wilderness to be guaranteed this state. Interestingly, on the other hand, this increased exposure of our lives to public attention has blurred the lines between what we consider private and public. Many of us willingly share private and intimate information publicly through social media like Facebook, Twitter, Youtube and Blogs so much so that Facebook CEO, Mark Zuckerburg has said privacy is no longer the “social norm” and “ People have really gotten comfortable not only sharing more information and different kinds, but more openly and with more people”. It is true that our levels of comfort with living our lives more and more publicly have changed. In particular, the younger generation today cannot imagine a world without internet, smart phones, Facebook and Twitter while the older generation are struggling to adapt to life with these additions.

The idea of privacy as a legally protected right in fact originated in the US well over a century ago when an article entitled ‘The Right to Privacy’ was published in the influential Harvard Law Review by two attorneys, Samuel D Warren and Louis D Brandeis. The article achieved legendary status and led to the birth of the legal recognition of privacy in the US in the early part of the 20th century. Notably, and arguably far more relevant today than at the time it was published, the article referred to “the intensity and complexity of life” and argued that invasions of privacy subjected a person to “mental pain and distress, far greater than could be inflicted by mere bodily injury” and that people needed to be protected. Today, unlike in the UK, modern tort law in the US offers comprehensive protection in the form of four categories for invasion of privacy. They are: (a) intrusion upon the plaintiff’s seclusion or solitude or private affairs; (b) public disclosure of embarrassing private facts about the plaintiff; (c) publicity which places the plaintiff in a false light in the public eye; and (d) appropriation, for the defendant’s advantage, of the plaintiff’s name or likeness.

Despite these developments in the US, privacy as a legally protected right was far slower to develop in the UK. It was finally recognised when the European Convention on Human Rights (ECHR) was implemented into UK law by way of the Human Rights Act 1998 (UK). Article 8 of the ECHR explicitly provides a right to respect for one’s “private and family life, his home and his correspondence” subject to certain restrictions. This leads to the consideration, having regard to this significant development in 1998 in the UK, of whether an individual’s right to privacy today is adequately protected by the law. In my view, there is adequate protection available today. A rapid evolution of the law of privacy in the UK has happened since 1998 with the Courts finding themselves obliged to give appropriate consideration and effect to Article 8 in the cases that come before them. A review of the significant case law is developed further below. However, it is worth first mentioning that there are numerous other laws which protect aspects of life in which invasions of privacy can occur. By way of example, privacy on your land and in your own home is protected through the cause of action of private nuisance; privacy of your personal space and bodily integrity is protected through the criminal action of battery and perhaps to a great extent by the Protection from Harassment Act 1997; the right to have your personal and professional reputation maintained is protected by the tort of defamation; and finally data protection legislation offers considerable protection for our private information and data when shared.

Most importantly, as referred to above, the Courts have been developing and expanding the law of privacy (without going as far as declaring a tort of invasion of privacy) through the equitable law of breach of confidence to encompass misuses of private information. It has recently been acknowledged by the Court in Judith Vidal-Hall & ors v Google Inc [2014] EWHC 13 that there is now an independent tort for misuse of private information. It is worth examining a selection of the most important cases chronologically to consider how the issue has been discussed and dealt with:

Douglas v Hello! Ltd [2001] QB 967, involved the unauthorised and surreptitious taking, and selling to Hello! magazine, of wedding photographs of the celebrity wedding of Michael Douglas and Catherine Zeta-Jones by a freelance photographer. While the Court made the important acknowledgement in that case that “ We have reached a point at which it can be said with confidence that the law recognises and will appropriately protect a right of personal privacy ” ultimately it was held that the claim could be dealt with under the equitable law of breach of confidence.

Campbell v Mirror Group Newspapers Ltd [2004] UKHL 22, involved well-known celebrity model Naomi Campbell suing Mirror Group Newspapers for breach of confidence over published photographs of her leaving a Narcotics Anonymous meeting. In that case it was stated that the cause of action for breach of confidence ” has now firmly shaken off the limiting constraint of the need for an initial confidential relationship” and that it should more appropriately be referred to as a cause of action for ‘misuse of private information’ since the law now imposes a “duty of confidence” whenever a person receives information he knows or ought to know is fairly and reasonably to be regarded as ‘confidential’ or, what is more appropriately termed ‘private’.

Wainwright v Home Office [2004] 2 AC 406 involved a strip search of the plaintiffs who had gone to visit a relative in prison. The search had been conducted in accordance with the prison rules and was carried out in a manner which was calculated, in an objective sense, to humiliate and cause distress to the plaintiffs. Lord Hoffman emphatically confirmed that there was no common law tort of invasion of privacy and that the general opinion of the judiciary was that legislating in the area of privacy was a matter for Parliament rather than ‘the broad brush of common law principle’.

ETK v News Group Newspapers Ltd [2011] EWCA Civ 439 involved an application for an injunction to stop the publishers of the News of the World Newspaper publishing, communicating or disclosing to any other person information relating to the identity of ETK or details of the sexual relationship between ETK and ‘X’, a person named a confidential schedule to the application. This case is useful as the Court summarised the steps which govern an application for an interim injunction to restrain publicity of private information. They are:

(a) First step: whether the applicant has a reasonable expectation of privacy so as to engage Article 8 of the ECHR. If this criteria is not present the application will automatically fail. A decision as to whether a reasonable expectation of privacy exists will take all of the circumstances into account and generally uses a test of whether a reasonable person of ordinary sensibilities, if placed in the same situation as the subject of the disclosure, would find the disclosure offensive. Protection may be lost if the information is already in the public domain;

(b) Second step: this step involves a balancing exercise with the right of freedom of expression in Article 10 of the ECHR. The decisive factor is the contribution which the information the subject of the disclosure makes to a debate of general interest.

In conclusion, an acknowledgement that the law of privacy in the UK is adequate today equally acknowledges the fact that the common law is constantly in a state of flux and evolution. As our society changes, and our concepts of privacy change, so to must the Courts be prepared to deal creatively with the cases of invasion of privacy that come before them as, I would argue, they have done to date by expanding upon breach of confidence law and developing the tort of misuse of private information. When one considers the definition of privacy one starts to appreciate the difficulties encountered by both the legislature and the judiciary, and their reluctance, in attempting to construct uniform laws, regulations and rules around that definition. As Chief Justice Gleeson noted in the Australian case of ABC v Lenah Game Meats Pty Ltd (2001) 208 CLR 199 “ the lack of precision of the concept of privacy is a reason for caution in declaring a new tort of the kind for which the respondent contends .” Some have argued that privacy itself is beyond the scope of the law because it is a natural human right in the same way as freedom is. Furthermore, like freedom, privacy can mean different things to different people depending, for example, on their upbringing, age group, gender, culture, global location, education or faith. Accordingly, the extent to which privacy may be seen to be invaded or intruded upon will depend on the individual and his or her relationship with society. Finally, I would venture to say that Mark Zuckerburg of Facebook may in the near future be proved right. As technology and interconnectivity continue to explode and expand privacy may eventually no longer be considered a social norm.

Bibliography

Books

– Privacy and Media Freedom, Raymond Wacks

– Defamation Law in Australia, Chapter 18 – Privacy, Patrick George

This work was produced by one of our professional writers as a learning aid to help you with your studies

1. The selection of an alternative dispute resolution mechanism is particularly pertinent in international trade cases because the parties are, by definition, domiciled in different nation states (Chuah, 2009). Since an agreement must therefore be reached on choice of law issues, it is common for parties to consider stepping outside standard litigation processes altogether and instead stipulating for arbitration to take place (Neipert, 2002).

Arbitration offers several advantages over litigation. Typically, it is less expensive than litigation, since fewer legal professionals are required. It is also perceived to lead to a speedier resolution of disputes due to decreased formality, the removal of the need to schedule around the timetable of the formal court system, and, typically, the absence of a right of appeal (Schmitthoff, 2007). Arbitration allows the parties to control a number of variables in the dispute resolution process through prior agreement (Mustill & Boyd, 2008). These include the choice of an arbitrator with specialist knowledge of the relevant area, the scope of the arbitration, the location of arbitration and the choice of law. In addition, arbitration is a private rather than public procedure and therefore will not be subject to public record: this is likely to be advantageous if the subject matter is particularly damaging to public image of company. By contrast, many of these same factors may prove disadvantageous to the parties in a different factual scenario. The lack of a right to appeal may become a disadvantage if the arbitrator makes an error of fact, or the arbitrator appointed is not as impartial as the parties would wish. In addition, arbitration is disadvantageous because it lacks formal mechanisms for the enforcement of arbitral awards or attendance at the arbitration, and cannot compel third parties to attend.

Litigation offers potential advantages over arbitration. It is, in principle, totally impartial as to the outcome of the case. It determines cases according to a fixed substantive law without reference to the general principles of fairness that an arbitrator might refer to (Moses, 2008). It also provides for an appeal procedure, should that be perceived as an advantage. In addition, there are fewer variables for the parties to control or anticipate in advance of the dispute arising, and litigation is supported by formal enforcement mechanisms, including contempt of court and proprietary remedies. By contrast, judges may not be specialists in the given dispute area, which my be deemed more important than their appearance of impartiality to the litigation process. Formal litigation is associated with delays, inflexible timetabling and higher costs, although it should be noted that the costs of any given dispute resolution mechanism are dependent on the facts of the case (particularly its complexity, length and the number of legal professionals employed).

It is also important to discuss the possible limitations that domestic laws may place on the nature of the arbitration, and the effect, therefore, that they may have to tip the balance in favour of one method over the other in any given situation. There are significant theoretical difficulties in determining the source and content of the arbitrator’s power: the form and nature of arbitration may be limited by the way in which law governing the contractual relationship between the relevant parties conceives of arbitration (Lew, 1978). Most legal systems adopt the position either that the arbitration agreement constitutes an “autonomous source of authority wholly independent of any national legal system” (Goode, 2004: 1178) or, alternatively, that the arbitration agreement “brings into play an autonomous arbitral order derived from the institutional character of arbitration and based on principles common to civilized states” (Mustill and Boyd, 2008: 66). There is, therefore, a conflict between the autonomous nature of the arbitration and its reliance on the law of the forum in order to confer this autonomy. This conflict may place a practical limitation on the form that the arbitration takes if the lex fori arbitrae does not permit the parties to consent out of particular legal mechanisms (Goode, 2006). Despite the intentions of the parties to contract out of it, litigation may be the only available mechanism.

2. To what extent has harmonization of legal rules in international trade taken place?

International trade is a legally complex field due to the disparate bodies of national commercial law that may apply to any given transaction (Sealy & Hooley, 2008). There is widespread recognition that international commercial codes are necessary to avoid the difficulties inherent in conducting international commercial transactions using the laws of individual nation states (Goode, 1991) and, as a result, significant efforts have been made to generate substantive legal codes that parties can incorporate by reference to govern their international trade transactions. Several specific codes should be referenced to outline the near-comprehensive scope of the fields in which harmonization has taken place: the Vienna Convention on Sale of Goods and standard form terms such as the Cartegen Incoterms govern international sale of goods, the UNCITRAL Model Law on International Commercial Arbitration governs alternative dispute resolution mechanisms in the international context, the Uniform Customs and Practice for Documentary Credits governs the payment mechanisms typically used in international trade. Further to these attempts at harmonization, Bonell (2003) has proposed that a global commercial code is developed that has an application to all members of the international trade community.

However, an equally significant movement has been underway which intends to secure harmonization of procedure in international trade (Goode, 2006). It is often overlooked that the substantive regulation of international trade takes place in a framework outside that of the national courts, and the harmonization of the procedures of dispute resolution is arguably as important as that of the substantive rules of international trade (Stephan, 1999). In this respect, the efforts of the European Union in harmonizing the conflicts of laws rules under the Brussels I Regulation and the Rome II Convention are particularly notable (Briggs, 2008).

What reforms are necessary to improve the legal position of international traders?

Stephan (1999) takes this observation to its logical conclusion, and argues that the legal profession should stop trying to unify substantive rules of trade law until a comprehensive framework has been developed for the dispute resolution mechanisms in which those rules will apply. Parry argues that inherent limitations arise when uniform international trade rules are implemented in different national legal systems. He assesses the benefits of further harmonization under three headings: the reduction of legal risks in international commerce, legal reform, and enhanced roles of international legal advisers. His argument is that harmonization operates in favour of one of those interests at any given time, but is likely to work against the other. Personally, I would seek to make the broader argument that further reform in the field of substantive harmonization is likely to suppress discussion of procedural harmonization. To my eyes, the most important reforms for the harmonization of the international trade system at present include a more uniform approach to dispute resolution, and an extension of a conflict of laws system such as the rules in place within the EU Member States, to members of the international trade community more broadly.

3. Produits SA v Products PLC

The question of which courts have jurisdiction to hear the dispute will be determined by the Brussels I Regulation. The Regulation applies to all civil and commercial matters (Art 1(1)) and this dispute is likely to fall squarely within that definition as a contractual dispute between two incorporated bodies. Art 5(1) states that in relation to contractual disputes, the court of the Member State in which the characteristic performance of the contract takes place shall have jurisdiction. The characteristic performance is “the performance for which payment is made by the counterparty” (Briggs, 2008: 171), and will therefore be the place where the goods are due to be delivered by the seller. Since the contract stipulates that the goods are to be provided FOB Southampton, then the place of performance is England. The English courts therefore have jurisdiction to hear the claim.

The applicable law will be determined by the provisions of Rome I. In the absence of a choice of law by the parties, Art 4(2) states that in contractual disputes where the contract is entered into in the course of a trade or profession, then the country in which the principal place of business is situated shall be the company or performance is to be made is the country whose law governs the contract. On the facts, it would appear that English law therefore governs: Products PLC is an English registered company, and the place of performance of the characteristic performance was England. For the avoidance of doubt, the contract between Products PLC and Produits SA was a contract for sale rather than carriage of goods, and therefore Art 4(4) does not apply.

Products PLC v Nee Soon Wat Pty

The question of jurisdiction in this case will depend on whether the claimants can argue that the office held by the defendant company in Rotterdam constitutes residence within a Member State of the European Union for the purposes of the Brussels Regulation. Art 59 states that in order to determine whether a party is domiciled in the Member States whose courts are seized of a matter, the court shall apply its internal law. Following Fawcett & Carruthers (2008), in order for a company to be resident in a particular country it must be demonstrated that the company has a fixed place of business from which it has carried out business for more than a minimal time and that the company’s business is transacted from that place. It is a matter of factual interpretation whether the defendant company carries out business in The Netherlands and has done for a significant period of time, but prima facie the existence of an office is likely to suffice. We may therefore apply the Brussels Regulation as above, although the characteristic performance here is effected by shipment CIF to Bangkok. Since this is not within a Member State, Art 5(1)(b) cannot apply, and Art 5(1)(c) directs us back to the general rules in Art 5(1)(a) that the courts of the place of performance will have jurisdiction. The claimants here would be able to make a strong argument on the basis of payment in sterling to a London bank account, combined with delivery CIF from a London port, that the relevant performance in this contract was due to be effected in England.

The applicable law will then be determined by Rome I, under Art 4(2) as above. Since the claimants are selling the tyres in the course of their trade or profession, then the choice of law is the country in which they have their principal place of business. Here, there is little doubt that since Products PLC are an English registered company, their principal place of business will be found to be England. English law is therefore likely to apply.

4. Distribution

Distribution is a highly simplistic method of overseas marketing. The legal structure of the distribution agreement is an international sale agreement: the international seller purchases the relevant goods from the domestic seller, and then sells the goods to third party buyers overseas for his own account (Goode, 2006). Within the distribution contract, no further legal obligations need necessarily be entered into between the parties except those contained in the contract of sale. The sale will typically be governed by standard commercial terms such as Vienna Convention on Sale of Goods 1980 (August et al, 2008).

The distribution method has several advantages. Most important is the simplicity and familiarity of the international sale agreement between the seller and the distributor: the method involves only a straightforward contract of sale for goods, governed by standard international terms. Under a distribution method, the domestic seller is not exposed to liability in the international market because the profit is made at the point of initial sale. In addition, no additional costs associated with selling in the overseas market are incurred to the domestic seller, since the international seller assumes any overheads (Neipert, 2002). There are, however, several disadvantages. Within a distribution agreement, the domestic seller has no further legal relationship with the international seller once the sale has been completed, and must therefore surrender all control over the goods and the manner in which they are sold. This can render it much more difficult to maintain a brand presence in the overseas market, since the domestic seller (who is also likely to be the producer of the goods) cannot control the manner and form in which the goods are sold without entering into further agreement (Goode, 2006). In addition, any revenue from the overseas sale is limited to the amount made in the initial sale to the distributor, who then sells for his own account in the overseas market: the domestic seller will not, within a distribution agreement, have recourse to any additional profit made at the point of sale to overseas consumers.

Franchising

The simplicity of the distribution method can be contrasted with the franchise. Franchising does not rely on a legal structure per se, but rather a specific business model in which the domestic seller grants a licence to the international seller which permits the latter to provide a good or service in the overseas market that is subject to a trade mark by the domestic seller (Benjamin, 2008). The franchisee will then sell the goods for his own account, and payment mechanisms between the overseas seller and the domestic seller will be referred to the units sold or the profit generated. By contrast to the distribution agreement, the franchise method allows the domestic seller to impose significant restrictions on the way in which the product is sold: these restrictions are intended to bolster sales by providing coherent to the franchise system, as well as implementing successful business practices (Goode, 2006). From the perspective of the domestic seller (‘the franchisor’), it has the advantages that it is a highly specialist marketing form that simultaneously allows the domestic seller to exercise a high degree of control over the franchisee without exposing himself to liability in the international market, since the domestic seller is not financially liable to the franchisee or creditors of the franchisee. From the perspective of the overseas seller (‘the franchisor’), the franchise method would present a significant disadvantage to a seller wishing to develop an independent sales method or brand presence in the overseas market, but would offer significant advantages in terms of business management support and branding.

The method that is preferred will depend on the likely balance that the parties seek between three factors: commercial convenience, ease of entering into specific legal relationship, and desire to enter into contractual relationship with overseas party (Schmittoff, 2007). One must also consider the international tax implications of the transaction (Goode, 2006) which although well outside scope of this analysis, may be determinative.

5. Structure

For the legal implications of the letter of credit to be explained, one must first have an understanding of its structure. A letter of credit consists of a number of contractual relationships between the parties that seek to provide an autonomous system of payment for a documentary sale (Wood, 2007). The credit is comprised of five contracts between the four relevant parties: the underlying contract between the buyer and the seller; the contract between the buyer and the issuing bank which instructs the latter to open the letter of credit, on terms that specify that payment is not to be made until the relevant documents are received; the issuing bank will enter into a contract with the advising bank notifying them of the existence of the credit and authorizing them to make payment to the seller when the relevant documents have been received; the issuing bank will also enter into a contract with the seller stipulating that payment will be made against documents; finally, the advising bank enters into a contract with the seller stating that payment will be made against documents when provided to the advising bank (Goode, 2006). Each of these contracts will typically be governed by the Uniform Customs and Practice for Documentary Credits (UCP), provided that it is expressly incorporated by reference into the contracts comprising the credit as required under both English law and Art 1 UCP itself.

Autonomy

The important result of the multiple contracts involved in the letter of credit is that it becomes a payment mechanism where payment is made autonomously from the underlying contract of sale (Sealy & Hooley, 2008). As a leading commentator has stated, one of the “primary functions of the letter of credit is to create an abstract payment obligation independent of an detached from the underlying contract of sale between the seller and the buyer and from the separate contract between the buyer and the issuing bank” (Goode, 2006: 971). The legal implication of the autonomy of each contract within the letter of credit is that the seller will receive payment against the documents regardless of the his performance of the contract of sale with respect to the goods. An exception to the autonomy principle is made in cases of proven fraud, and in that respect the letter of credit is analogous to a bill of exchange in terms of its security of payment (Benjamin, 2008).

Enforceability

The principle of autonomy of the contracts comprising the letter of credit is supplemented by the principle of enforceability: payment must be made against documents that have been correctly tendered to the advising bank under the terms of the contract between those two parties (Wood, 2007). There must be strict compliance with the terms of the letter of credit and small discrepancies between the documents and the terms of the letter of credit will prevent payment being made (J H Rayner v Hambros Bank, 1943).

The paramount advantage of the letter of credit is that it provides certainty and security in payments made in international trade transactions, where other mechanisms may fail to ensure that the seller is paid in a timely fashion once title to the goods has been received (typically in the form of a bill of lading or similar document of title) (Sealy & Hooley, 2008). The letter of credit has the potential to give rise to legal oddities into two situations, either where payment will be made against documents even in situation where parties know that goods have not been tendered under the contract, or in case where goods have been tendered but payment cannot be made against the documents because of an otherwise insignificant difference between the wording of the documents and the terms of the letter of credit.

6. This problem will seek to briefly advise Westminster PLC (‘Westminster’) in relation to each potential claim that they have against the Ron under the contract of sale.

The most significant claim that Westminster has is in respect of the boxes of rum that have fallen from the crane into hold and onto quayside during loading. Under the terms of the Cartogen Incoterms 2000, the seller in an FOB contract is under a duty to load the goods onto the ship. Despite the significant criticism of the rule in Pyrene v Scindia (1954), the goods are deemed to have been loaded at the point at which they cross the ship’s rail (Benjamin, 2008) and as a result, the party that bears the risk of the damage to the broken bottles of rum will depend on which side of the ship’s rail the goods were above in the moment before they fell from the crane. It is likely that Westminster will bear the risk of all the boxes that fell into the hold, as their location would imply that the goods had passed the ship’s rail before they fell. Westminster would, however, have a claim against Ron in respect of the boxes that fell into the quayside, since it is unlikely that they had passed the ship’s rail before falling. The claim would be governed by Arts 46-50 Vienna Convention on Sales.

A second claim can be made in respect of the failure of the master of the vessel to take more than half the shipment. Under the terms of the Cartegen Incoterms 2000, the seller in an FOB contract is under a duty to load the goods, and is therefore liable for breach of that obligation in nominating a ship that refuses to load the full cargo. Westminster’s remedies for breach are governed by the Vienna Convention on Sales1980, in particular Art 51(1) which states that the buyer may make use of the remedies listed in Arts 46 – 50 in the event that the seller delivers on a part of the goods or if only a part of the goods delivered is in conformity with the contract. Both of these criteria apply on these facts.

A third claim can be made in respect of the inadequate screw tops provided by Ron and the subsequent damage suffered to the bottles. Westminster will have a claim against Ron under the contract of sale for the provision of faulty goods. Art 35(1) Vienna Convention on Sales places Ron under an obligation to deliver goods which are “contained or packaged in the manner required by the contract” and further states in Art 35(2)(d) that goods will not be deemed in conformity with the contract unless they “are contained or packaged in the manner usual for such goods or, where there is no such manner, in a manner adequate to preserve and protect the goods”. There is no indication that Westminster was aware of the inadequate packaging and Ron could not therefore raise a defence to the claim under Art 35(3), which states that the seller will not incur liability where the buyer was aware of the defect.

A fourth claim can be made in respect of the bottles that have broken due to inadequate packing for the voyage. Under the Cartogen Incoterms 2000, it is the duty of the seller in an FOB contract to provide export packing. Westminster therefore has a valid claim against Ron for the value of the damage that was suffered due to inadequate packaging.

As a final point, it is clear that Westminster does not have a claim against Ron in respect of the delay in loading. The delay is contractually insignificant because the goods were shipped on 18th September, which is still within contract terms (“September shipment”).

In respect of the claim that has been made against Westminster for storage fees payable to the Colombian authorities, my advice would be to resist payment and direct the Colombian authorities to Ron. Under the terms of the Cartogen Incoterms 2000, the seller in an FOB contract is under a duty to pay any storage fees incurred.

Bibliography

Vienna Convention on Sales

Uniform Customs and Practice for Documentary Credits

UNCITRAL Model Law on International Commercial Arbitration,

Cartegen Incoterms

Brussels I Regulation

Rome I Convention

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