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Dispute Resolution

Employers Beware – the extent of vicarious liability; further enlargement?
Monday 6th August 2018

Barclays Bank Plc v Various Claimants [2018] EWCA Civ 1670

This case concerned a group litigation on behalf of 126 Claimants who sought damages against Barclays Bank Plc ("the Bank") in respect of sexual assaults which they alleged were carried out by Dr Gordon Bates. The majority of the Claimants were applicants for future employment with the Bank and the remainder were existing employees. In each case the Claimant was required to attend the consulting room of Dr Bates at his home and in each case, the Claimant alleges she was sexually assaulted by Dr Bates in the course of his examination. A group litigation order was made on 6 April 2016, and on 15 December 2016 the Judge ordered that there should be a trial on a preliminary issue, namely:

"…Whether the Defendant is vicariously liable for any assaults that any claimant may prove to have been perpetrated by Dr Gordon Bates in the course of medical examinations carried out at the request of the defendant either before or during their employment with the defendant…"

Various Claimants v Barclays Bank Plc [2017] EWHC 1929 (QB) [para 2].

This preliminary issue was decided in favour of the Claimants – in that Mrs Justice Nicola Davies concluded that vicarious liability was established. The Bank subsequently sought to challenge that initial conclusion.

Facts and Issues

Dr Bates, who died in 2009, had practised as a general practitioner until around 1968. From then until 1984 he conducted medical examinations and assessments on behalf of the Bank for employees and prospective employees. These examinations were a pre-condition of the Claimant’s employment. In addition, many of the Claimants were either teenagers or very young women at the date of the relevant medical examination.

Examinations were carried out at Dr Bates’ (who was often referred to as “the Bank’s Doctor”) home. Furthermore, the candidates were often unaccompanied and/or examined without a chaperone present. The examinations were alleged to have typically included inappropriate examinations of the breasts and/or digital contact or penetration of the anus or vagina.

In 2013, a police investigation into the activities of Dr Bates concluded that, had the Doctor been alive, there would have been sufficient evidence to pursue a criminal prosecution.

The Claimants argued that the Bank was vicariously liable for the sexual assaults by Dr Bates. This rationale had three strands:  Dr Bates was either a direct employee of the Bank or, in the alternative,  had a role "akin to employment". Finally, this could be argued on the basis that the relevant examinations took place because the Bank held out "Dr Bates as a competent and appropriate doctor to carry out a medical examination… the Defendant [the Bank] required the examination to take place and the Claimants relied on this assurance to attend for an examination as required".

The Claimants also pleaded a direct duty of care on the part of the Bank, and/or a "non-delegable duty of care" in respect of these medical examinations. However, it was vicarious liability which was pursued before the judge of first instance.

The Bank, in summary, neither admitted nor denied the allegations of sexual abuse. They argued that Dr Bates was at no point in time an employee of the Bank, or in a situation akin to employment. They argued that he was self-employed and engaged by the Bank as an independent contractor. On the Bank’s case, Dr Bates himself would be liable for any assaults proved.

The evidence from the Bank included:-

  • Confirmation that offers of employment to prospective candidates for employment were made subject to a – "…satisfactory medical examination”.
  • The relevant offer letter would include details of the time and venue of the examination.
  • The candidate's details were passed to a clerk who would arrange appointments with Dr Bates.
  • A fee was payable to Dr Bates for each medical examination.
  • Following the medical examination, Dr Bates would return a standard report to the bank, completed and signed by himself and the candidates.
  • Ms Glendinning would read the forms and if the medical was satisfactory the successful candidate would be offered employment.
  • There was a set fee for each medical examination for which Dr Bates would invoice the Bank. The banks evidence was that they could not recall any other doctor being engaged in this way, save for Dr Bates, during the relevant period, although there was some documentary evidence suggesting a very small number of other examinations had taken place.

The Judge at first instance, in light of the submissions made and the relevant case law, summarised that the law on vicarious liability had suitably evolved. She laid emphasis on the observations of Ward LJ in E v English Province of our Lady of Charity [2012] EWCA Civ 938, and in particular his remark that the "law of vicarious liability had moved beyond the confines of a contract of service" at paragraph 73. She noted the similar observation of Lord Phillips in Catholic Child Welfare Society v Various Claimants [2012] UKSC 56 at paragraph 19. The Judge also considered the recent decisions of the Supreme Court in two linked cases: Cox v Ministry of Justice [2016] UKSC 10, and Mohamud v WM Morrison Supermarkets Plc [2016] UKSC 11.

The judge agreed with the submissions of both parties that the question involved a two-stage test:

  1. Is the relevant relationship one of employment or "akin to employment"?
  2. If so, was the tort sufficiently closely connected with that employment or quasi-employment?

She then turned to examine the instant case, set against the five criteria relevant to the first stage. These criteria had been identified by Lord Phillips in Catholic Child Welfare Society at paragraph 35, and Lord Reed in Cox at paragraphs 20-23 namely that:

  1. The employer is more likely to have the means to compensate the victim and can be expected to have insured against that liability;
  2. The tort will have been committed as a result of activity being taken by the employee on behalf of the employer,
  3. The employee's activity is likely to be part of the business activity of the employer,
  4. The employer, by employing the employee to carry on the activity will have created the risk of the tort committed by the employee, and
  5. The employee will, to a greater or lesser degree, have been under the control of the employer. With that structure in mind, the judge turned to record her conclusions.

The Judge asserted that the Bank was more likely to have the means to compensate the victims "and can be expected to have insured against that liability". Dr Bates had died years before, therefore his estate had long since been distributed and his medical defence insurers would not indemnify for alleged sexual assaults. Consequently, the Claimants' only legal recourse was to sue the Bank as there was no issue that the Bank, or their insurers, had the means to meet the claims.

As to the second criterion, the judge concluded that the tort was committed as a result of activity being undertaken by Dr Bates on behalf of the Bank. An applicant's employment was conditional upon the Bank being –

"…satisfied as a result of the medical examination that the applicant was medically suitable for service … and was recommended for life insurance at ordinary rates. Dr Bates was the chosen doctor at the bank. Prospective employees or existing employees were given no choice as to the doctor to be seen. The bank made arrangements for the medical examinations, directing present or future employees where to go and when. The medical reports completed by Dr Bates were headed with the bank's logo, signed by himself and the relevant Claimant. The Claimants felt compelled to undergo the pre-employment examination because they understood (correctly) that it was an essential stage of the bank's recruitment process. The Claimants had no reason to be examined by Dr Bates other than their proposed or existing employment with the bank. It was the bank which paid for the examination… the work carried out by Dr Bates was for the benefit of the bank … given all of these facts I find that the medical examination assessment of a Claimant and subsequent report of the same to the bank where Dr Bates was performed for the benefit of the bank and on its behalf..." [para 24]

Considering the third criterion, the Judge concluded that the tortfeasor's activity was for the benefit of the Bank "and in so doing was an integral part of the business activity of the Bank" [para 25].

In relation to the fourth criterion, the Judge concluded that the employer "created the risk of the tort": the Bank directed the Claimant when and where to go, and the Claimant had no choice in the conditions of examination:

"…The Bank directed the doctor to perform a physical examination which included a chest measurement. The claimants, many of whom were 15 or 16, saw the doctor alone in his room when, as part of the medical examination, they were asked to remove clothing. In my judgment given the factual set of circumstances the Bank did create the risk of the tort..." [para 26].

Finally, the Judge considered the fifth question finding that:

“…The fact that Dr Bates organised his own professional life and carried out other medical activities does not negate an argument that he was under the control of the Bank. Were this to be a strict employer/employee situation, the fact of part-time employment and/or whether the employee has one or more other jobs does not prevent an employer from being vicariously liable for acts or omissions occurring during the course of the employee's relevant employment. Further, the fact that Dr Bates performed the examinations in his own home does not negate the "control" argument. An employer can be vicariously liable for the act of its employee, e.g. a driver, even though the alleged act or omission takes place outside the employer's premises. What has to be looked at is the control which existed as between the Bank and Dr Bates in respect of the identified activity, namely medical assessments, examinations and reports…”[para 27].

The Judge was, therefore, for a range of reasons satisfied that the Bank exerted sufficient control to satisfy the first criterion of the two-stage test.

The judge then turned to the Stage 2 of the test and concluded that, on the facts already recited, the tort was suitably connected with the Bank’s quasi-employment of Dr Bates. Consequently, the abuse would not have occurred otherwise. Lord Phillips judgement in Catholic Child Welfare Society neatly sums up the position:

"…the relationship has facilitated the commission of the abuse by placing the abusers in a position where they enjoyed both physical proximity to their victims and the influence of authority over them …" [para 84].

The Court of appeal declined to interfere with Mrs Justice Davies reasoning and approach as to this preliminary issue.

To conclude, it is a matter of opinion as to whether this judgement operates to expand the scope of vicarious liability. Arguably it amounts to a restatement of understood and established principles applied in the context of sexual abuse.

For more information on the topic please contact Lachlan Nisbet.


Off the rails!
Tuesday 10th July 2018

Last week there was an interesting decision in the Court of Appeal to uphold the law of nuisance for private homeowners against railway operators, and the ripples may be felt across the transport sector.

In February 2017, Mr Williams and his neighbour, Mr Waistell brought claims for private nuisance against Network Rail, who own and manage most of the rail track in England, Scotland and Wales. For over 50 years there had been Japanese knotweed growing on a railway embankment reaching high over the bungalows inhabited by the claimants, and Network Rail had known about it.

Japanese knotweed has roots which grow up to 3m deep and 7m in every direction, and is incredibly difficult to eradicate. It was brought to Britain by the Victorians because they thought it looked jolly, but they lost control of it just like in the little shop of horrors and it spread across the entire country. It can seriously damage building foundations, making it a red flag to anyone who is considering investing in a property (and a nightmare for anyone desperate to sell).

When the roots of the plant crept over the boundary and threatened Williams’s and Waistell’s personal paradises, they brought claims in Cardiff County Court for private nuisance on the grounds of encroachment, asserting that Network Rail was liable as the occupier of the land emitting the nuisance, also that it constituted an interference with the quiet enjoyment of their land by reducing its amenity value.

The ruling

The Court originally found in the homeowners’ favour. There was however no evidence that physical damage had been done to the property at that time, so it was decided the claim could not be made out under the encroachment ground. It was, however found that there had been loss of amenity in the land since the homeowners’ could not sell their land at market value if they wished – this constituted a diminution of the asset value. The homeowners’ therefore were awarded damages for loss of quiet enjoyment and in order to fund a treatment package for the knotweed, as well as a small amount for diminution of the building’s value.

On appeal

Network Rail appealed and on Tuesday last week (3 July) the Court of Appeal again found in the homeowners’ favour. It was held, however that the Court in the first instance had erred in its approach. Nuisance is not an action that should be used to protect property as an investment or an asset, but instead to protect the land owner, particularly in their enjoyment of the land. The original Court had approached the tort as a claim for pure economic loss, which was incorrect and a radical reformulation of its purpose and scope. There was no requirement for physical damage to the property, as the risk of future physical damage imposed an immediate burden on the landowners in terms of increased difficulty to develop the land and therefore diminished the utility and amenity of the property. Finally, the heads of nuisance, namely encroachment, interference and physical injury were ‘merely examples’ of violations of property rights, and were elastic terms, which did not always reflect the changing social conditions.

What now?

The impact of this ruling has potential to ‘open the floodgates’ to a wave of new claims in private nuisance. At the same time, it raises the bar for rail and other similar service operators, imposing an obligation to take better care of their land, or else be prepared to pay up. This is a clear statement from the Court that the law of nuisance will be upheld with regard to private landowners. That said, the exact legal scope of this precedent is not yet known, in particular as to whether this is an indicator for tram and highway operators also to heed. There are almost 20,000 kilometres of rail track in the UK and a further 8 light rail and tram systems in operation, not to mention roads and highways. The potential financial burden could be felt across the entire transport sector.

For the BBC news article, see below:

Case citations: Williams v Network Rail Infrastructure Ltd; aka Waistell v Network Rail Infrastructure Ltd

(Case analyses available on westlaw):

Court of Appeal – 3 July 2018:                                     [2018] EWCA Civ 1514

County Court (Cardiff) – 2 February 2017:             Unreported

For more information on the topic please contact a member of our Litigation team or Howard Hartley directly. 


Giving up on minimum living standards to save for access to justice
Thursday 29th March 2018

Last week the Law Society published a press release, saying that it has begun a campaign to change the rules on civil legal aid eligibility.

In summer 2017 the Supreme Court ruled that employment tribunal fees were unlawful because households on low incomes were expected to sacrifice an acceptable standard of living (R (Unison) v Lord Chancellor [2017] UKSC 51), this was a significant victory for Unison, and the Law Society looks to rely on the result.

Currently, the provision of civil legal aid is calculated on a means-tested basis. However, entitlement is not absolute and an incremental assessment means that some recipients still have to make a contribution towards their legal costs. Up to 2010, the levels that determine whether a household meets the standard of entitlement were up-scaled annually, taking account of inflation. However, since 2010 these levels have been frozen. 'The financial eligibility test for civil legal aid is disqualifying people from receiving badly-needed legal advice and representation, even though they are already below the poverty line,' said Law Society president Joe Egan, 'The position has been getting progressively worse, because the means test thresholds have been frozen since 2010, while the cost of living, of course, has not.'

A report commissioned by the Law Society, and produced by Professor Donald Hirsch of Loughborough University, found that households on incomes 10% to 30% below the “minimum income standard” were being made to contribute towards their legal aid provision.

The Joseph Rowntree association reported in 2016 that, to achieve the minimum income standard, single people need to earn at least £17,100 a year before tax, and couples with two children at least £18,900 each. Further, capital assessment means testing treats house values as funds available towards legal costs. As a result, households are being asked to contribute towards their legal costs when they are already below the minimum standards required to sensibly survive and participate in society. Mr Egan said: “The assumption that someone could sell their home to cover a legal bill is out of line with other forms of state means-testing – such as help with care costs, where the value of your home is ignored.”

Capital assessment now operates so that, in some cases, those with savings of over £8,000, and in other cases just £3,000, are required to make a contribution. This limits access to justice for some of the very poorest when disputes arise, for example, concerning domestic abuse, housing disputes or child access rights.

The Law Society is calling on the Ministry of Justice to review the means testing regime, establishing the pre-2010 real-terms test in accordance with the Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO). They are also asking that they exempt those on means-tested benefits from capital assessment.

Campbell Robb, chief executive of the Joseph Rowntree Foundation said: “As a country we believe in justice and compassion, but it is simply unacceptable that millions of people are unable to access legal support because they live on a low income.”

To find out more on the topic, please contact a member of our Litigation team or Howard Hartley on 0161 836 6847 or via email


Unrepresented Court users do not need to be suspicious, solicitors are under a duty to assist the Court
Tuesday 27th March 2018

Following on from our recent blog dealing with a recent Supreme Court authority confirming Litigants in Person have no entitlement to special treatment when it comes to application of procedural rules the Court of Appeal has also made a determination affecting litigants without legal representation.

In the case of Kaur v Leeds Teaching Hospitals NHS Trust [2018] EWCA Civ 311 the Court of Appeal gave directions for the Respondent to the Appeal to prepare the Appeal Hearing Bundles.  That direction runs contrary to the usual rule that the person bringing the appeal (the appellant) is the person that must assume the task of preparing the hearing bundles.  However, there is a longstanding principle that where one party is not legally represented then the legally represented party assumes the responsibility for preparation of the Court hearing bundles.  The reasoning behind this is simple, solicitors will be more familiar with the Court rules on how the bundles should be put together and an effective bundle will enable the hearing to be dealt with more efficiently.

In this case the Appellant (who was acting in person, without legal representation) was not happy that her opponent had been directed to prepare the hearing bundles even though the Court had directed that she could file at Court a supplemental bundle if she felt the bundle prepared by her opponent omitted anything.  The Appellant was apparently suspicious that the Respondent would not prepare the bundles comprehensively and applied to request that the Court reconsider the directions given.

The application was not helped by the fact that the Appellant had prepared bundles used for her initial application for permission to appeal and the Court had found those bundles to be inadequate.  The Appellant had also refused to accept delivery of or consider the suitability of hearing bundles delivered to her by the Respondent’s solicitors and did not appear at her application hearing.

The Court of Appeal declined to reverse the directions.  In this case, quite righty, the Court made it clear that the Respondent should resend the hearing bundles they had prepared to the Appellant and that she should accept them.

Although civil court proceedings in this jurisdiction are adversarial, solicitors instructed by parties to a claim do have duties as Officers of the Court to assist the Court in the effective disposal of the claim in a just and fair manner.

For more information on the topic, please get in touch with a member of our Litigation team or with Simon Morris dirrectly via email or on 0151 600 3394.


Internal Investigations and Litigation Privilege
Tuesday 20th March 2018

Organisations often have policies and procedures in place for conducting investigations, whether on matters of health and safety, employment, or other allegations of wrongdoing.  Those investigations will generate documents and there have been several recent cases on the question of whether those documents are disclosable in subsequent litigation.  A recent High Court Judgment gives further guidance on this issue.

In litigation the parties must conduct a search for documents as ordered by the Court and then disclose documents (including electronic documents) to their opponent.  This is an area of proceedings which is subject to reform, with consultation under way on proposed reforms as discussed in our previous blog here.

When considering which documents to disclose to its opponent, a party can object to the inspection of otherwise disclosable documents on the basis that they fall within one of two types of privilege:

  • Legal professional privilege, which covers confidential communications between a lawyer and their client for the purpose of giving or seeking legal advice.
  • Litigation privilege, which covers confidential communications between a client and their lawyer (or a third party) where adversarial litigation has started or is in reasonable contemplation, and the communication is for the sole or dominant purpose of litigation.

During internal investigations documents are always generated at the early fact-finding and interview stage, where litigation has not even been threatened.  If litigation is later commenced, the question is whether those documents are protected by one of the forms of privilege above.  The latest case to have considered this issue is Bilta (UK) (in liquidation) & others v Royal Bank of Scotland & another [2017].

HMRC had sent a letter to RBS making allegations about certain transactions which took place during 2009.  Later correspondence was sent by HMRC stating that the bank’s claim for VAT input tax might be at risk, and they invited the bank to set out its views.  The amount in dispute was some £86 million plus interest.  RBS instructed a firm of solicitors to lead the internal investigation.  That investigation generated interview transcripts and other documents.

The transactions involved the former directors of Bilta and the liquidators of that company later commenced Court proceedings against the bank, and they sought the disclosure of documents generated by the internal investigation, including the interview transcripts.  The Court considered whether those documents were protected from disclosure by litigation privilege.

Adversarial litigation was in reasonable contemplation at the time of the internal investigation, because of the letter received from RBS.  The issue here was over the dominant purpose of the documents – whether they had been generated for the purpose of conducting the contemplated litigation or for some other purpose such as trying to persuade HMRC not to issue a tax assessment.  Sir Geoffrey Vos took the view that the latter was at most a secondary purpose and held that the dominant purpose was litigation.

The Judgment refers to various facts including the letter from HMRC asserting that there might be grounds to deny input tax (which was consistent with a dispute arising), that RBS instructed an external tax litigation team to lead the internal investigation, that the solicitors’ letter of engagement described their work as “to provide legal advice in respect of a dispute with HMRC regarding the recoverability of income tax…” and that the letter of RBS to HMRC following the investigation, was comparable to a letter of response to a letter of claim.  On this basis the Judge determined that these documents were created for the sole or dominant purpose of litigation against HMRC (in the First Tier Tribunal (Tax Chamber)), and that RBS was entitled to refuse to disclose them to the liquidators of Bilta on the ground of litigation privilege.

Other recent decisions have gone the other way, and have found that (in the circumstances of those cases) documents generated by an internal investigation are not privileged.  So each case will be determined on its particular facts and all parties to litigation must properly consider their disclosure obligations in light of the statements of case and the disclosure direction from the Court.  However there are certain practical steps that a business can take to seek to improve the prospect of successfully arguing that internal investigation documents fall within litigation privilege.  They include the following:-

  • Properly understanding what documents are being created by the internal investigation and why they are being created.  In this case the Judge considered the contemporaneous evidence of the bank’s senior employees which set out their reasons for conducting their internal investigations;
  • Instructing specialist legal advisors at an early stage;
  • Considering to whom documents are disseminated, and why, and including legal advisors in correspondence; and
  • Marking correspondence and documents with confidentiality terms including that they are privileged and have been created and disseminated in contemplation of litigation.

These steps will not be determinative of the issue and so there will always be a risk that the documents generated by an internal investigation will be disclosable in subsequent litigation, and the recent cases should act as a reminder to businesses (and to their in-house legal advisors) of the risks involved when carrying out such investigations.

If you would like to find out more on the topic please contact Glym Lancefield on 0151 600 3060 or via email.


Threat to disclose confidential information
Tuesday 27th February 2018

There can often be a dramatic fallout when a relationship comes to an end, and, in light of the decision in UK Mission Enterprise Limited v Peter Lendvai [Unreported], it would appear that the termination of an employment relationship is no different.

In this instance, the aggrieved departing individual was the subject of an interim injunction which prohibited the publication of confidential information regarding the company’s clients. The interim injunction was accompanied by a penal notice which meant that if the terms of the injunction were breached it would put the individual at risk of being found in contempt and facing a possible prison sentence.

The company provided support to members of the Dubai government and its royal family whilst they were in the UK. The individual was employed by the company and had signed a standard employment contract which prohibited him from using or disclosing confidential information either during, or after, his employment ended. Due to the nature of the job in question, the employee had access to confidential information regarding the company’s clients.

The individual was dismissed and a dispute arose which culminated with the individual writing to the company’s managing director threatening to disclose the confidential information he had obtained during his employment, most notably, publishing photos and recordings regarding the company’s esteemed clients on the internet.

The company proceeded with legal action but, by the date of the hearing, the individual had changed his position and confirmed that he no longer had an intention to carry out his threat and was concerned that if the injunction was granted then he could be held responsible for the actions of other aggrieved employees who did proceed to disclose the company’s confidential information.

Notwithstanding the individual’s change in position at the date of the hearing, the court decided that there was a real risk that the company’s confidential information would be disclosed if the individual was not restrained. The balance of convenience favoured protecting the company against the risk of disclosure and an interim injunction was granted.

In the event that the terms of the injunction were breached by a third party, it would be for the individual to prove that he was not responsible for the publication in order to avoid potential committal proceedings.

It would therefore be advisable for any employer to (a) review the provisions regarding confidential information in your employment contracts; (b) consider how securely your confidential information is kept and monitor those who have access to it; and (c) act swiftly, decisively and seek urgent legal advice should an aggrieved employee make threats against your company.


No special rules for a Litigant in Person, the Supreme Court Rules
Wednesday 21st February 2018

Today the Supreme Court rejected a plea for relief from a Litigant in Person (LiP) who had failed to strictly adhere to the Civil Procedure Rules (CPR).

By way of background, the case involved Mr Barton who sought to bring a claim for professional negligence against Wright Halsall, his previous solicitors, which was issued on 25 February 2013. The Claim Form would have been served by the Court upon the Defendant, however, pursuant to the exception in CPR 6.4(b) Mr Barton elected to serve it himself.

On 26 March 2013 the Defendant’s solicitors informed Mr Barton that they were instructed and that they “await service of the Claim Form and Particulars of Claim”. On 24 June 2013, which was the last day of the 4 month time period before the expiry of the Claim Form, Mr Barton emailed the same to the solicitors. He received an automatic reply and a number to contact if the case was urgent, which he did not use. Later that day, the solicitors replied to Mr Barton stating that they had never confirmed that they would accept service by email and as such the claim form had expired unserved and was statute-barred.

The Court rules provide that service by email is only permitted where the opponent has indicated that he is willing to accept service by those means.

Mr Barton argued at Court that his service complied with the rules on the basis that the solicitor’s email of 24 June amounted to an indication that they would accept service by email. In the alternative he asked that service be validated pursuant to CPR 6.15(2). In the further alternative he asked for the validity of the claim form to be extended (CPR 7.6). Mr Barton failed on all three grounds and he was given leave to appeal in respect of the second ground only, leaving the question to be answered whether the service by email should be validated as “good service” after the event.

In the Supreme Court Lord Briggs in his judgment stated that “there cannot fairly be one attitude to compliance with rules for represented parties and another for litigants in person”. He did however note that “the answer is to make very different new rules (as is now planned) rather than to treat litigants in person as immune from their consequences”.

Whilst Mr Barton’s appeal was narrowly rejected by a majority of 3-2 in the Supreme Court, it has paved the way for reforms to the Civil Procedure Rules in the near future. In the meantime, the case highlights the importance of ensuring that consent is obtained prior to serving documents by email and, if you are in any doubt as to compliance with the Court rules, the importance of seeking legal advice.

Interested parties will also note our recent blog regarding service by email in arbitration proceedings:


To repair or replace…?
Tuesday 20th February 2018

Disputes regarding the scope and application of repairing obligations in leases frequently arise and, given the financial implications for the parties involved, are significant.

The recent decision in De Havailland Studios Ltd v Peries v Voysey [2017] UKUT 322 (LC) Upper Tribunal (Lands Chamber) provides a useful reference on the question of choice of whether to repair or replace and whose choice it is.

The case concerned defective windows in a converted residential block of forty one flats.  One of the flats was let to two lessees on a long lease under which the landlord was obliged to repair the windows with the ability to recover the cost from the two lessees through a service charge. 

The landlord contended that the windows should be repaired whilst the tenants contended they should be replaced, on the basis that it would be a false economy to repair them.  The cost of replacement was considerable and would have financial implications for the landlord.

The tenants applied to the First Tier Tribunal for a determination of the method of repair to be invoked and the Tribunal, whilst finding that both methods were reasonable, gave judgment that the better method in that instance was replacement because it would be unreasonable to incur the costs of repair as against replacement.

The landlord appealed the decision on the ground that the First Tier Tribunal was wrong, where having found that both methods were reasonable, it then decided which method should be adopted based its view that the costs of repair were unreasonable. 

The landlord was successful on the appeal, with the Upper Tribunal stating that the key consideration was where the two courses of action were reasonable the decision on which to use lies with the landlord.  In making its decision, the Upper Tribunal referred to the decision in Waaler v Hounslow LBC [2017] EWCA Civ 45 which determined that when deciding whether cost were reasonable, it was necessary to consider the outcome to the tenants as opposed to merely whether or not the costs themselves were reasonable in amount.  Underlying the decision was the principle that where a contract confers discretion on a party to incur charges which the other party is liable to pay, the party exercising the discretion must act rationally. 

With particular benefit to residential landlords the moral of the story is that the choice of which method to use in terms of repair or replacement within the context of their repairing obligations should not be assessed on cost alone and, for example, on which method is cheaper, but on which method will yield a reasonable outcome, within the facts and context of each case. 


Government launches new Office for Product Safety Standards
Tuesday 20th February 2018

On 21 January 2018 the Government announced the creation of a new Office for Product Safety Standards (“OPSS”) which is tasked with “identifying consumer risks and managing response to large-scale product recalls and repairs”.

The announcement comes as part the Government’s response to the Working Group on Product Recalls and Safety. The report, published in July 2017, recommended the “need for a centralised technical and scientific resource capability to support decision making and co-ordination of activity of Local Authorities and the businesses they regulate”

The OPSS is based within the department for Business, Energy and Industrial Strategy (“BEIS”) and covers general consumer product safety including white goods, toys, clothes and cosmetics. Outside its remit are products such as vehicles, medicines, medical devises or workplace equipment which are already covered by other agencies.

The primary function of the OPSS is to seek to ensure that UK consumers receive the highest possible levels of protection from unsafe goods, ensure that UK businesses are protected from unfair competition posed by sub-standard and unsafe products and help give businesses confidence in meeting their responsibilities to supply safe goods. In order to achieve this the OPSS will support the network of Local Authority trading standards teams by providing advice and support to ensure that manufacturers, importers and retailers meet their responsibilities to place safe products on the market. It will also co-ordinate rapid and effective action if and when national safety issues arise.

Currently the OPSS has been granted a budget of £12m per year. Whilst the OPSS has already been launched it is anticipated that its capabilities will develop over time and that not all of its aspects will be within its remit from day one. It is hoped that the implementation of the OPSS will result in a uniform approach to the enforcement of safety standards which thus in turn will reduce the number of faulty goods on the market.

Consumers who have purchased faulty goods have a number of legal remedies available to them pursuant to the existing breach of contract and consumer protection legislation.  The launch of this new Office for Product Safety Standards will hopefully lead to fewer consumers being placed in that position.


A fatal break
Friday 16th February 2018

The recent decision in Sackville UK Property Select II (GP) No 1 (1) Sackville UK Property Select II Nominee (1) Ltd (2) v Robertson Taylor Insurance Brokers Ltd (1) Integro Insurance Brokers Ltd (2) [2018] EWHC 122 (Ch) serves as a reminder of the preparation and attention to detail that must be taken when serving break notices.

The case concerned the assignment of a lease from Robertson to Integro following Integro’s acquisition of Robertson.  The lease was for a term of ten years expiring on 23 March 2023, with a tenant’s option to break the lease on 14 March 2018 by the tenant giving not less than nine months’ prior written notice to the landlord.   The tenant was defined by the lease as “Tenant includes the successors in title of Robertson and any person in whom the Lease may from time to time be vested by whatever means”.

The licence to assign the lease took effect on 29 March 2017 and contained a covenant for Integro to apply for registration of the lease within ten business days of completion of the assignment.  Integro did not comply with the covenant and applied for registration just prior to 7 July 2017, with 7 July 2017 being the date of registration.   

Prior to registration, Integro exercised the break option by serving written notice on the landlord on 2 May 2017. 

The landlord contended that the break notice was invalid because as Integro was not the registered proprietor of the leasehold interest it was not the tenant and it could not, therefore, exercise the break option.  Until the lease was registered to Integro, Integro was the beneficial and not the legal owner of the leasehold interest, the result being that Integro had no standing to enforce the break covenant under the lease.   

The only basis then on which the break notice could be valid was if it could be proved that Integro had served it on behalf of Robertson but the court found that there was no evidence to that effect and determined that the break notice served by Integro was invalid and the lease was not terminated.

Points to take away from this decision are:

i.              identify who the parties are under the lease;

ii.             check the wording of the lease and all documents associated with it such as licences to assign and deeds of variation etc;

iii.            check the wording of the break clause to identify any specifications and conditions attached to it;

iv.            prepare as early as possible ahead of exercising a break option to ensure there is sufficient time to consider these technical aspects.