Dispute Resolution round-up - January 2022

In November 2021, the Supreme Court handed down its highly anticipated judgment in Lloyd v Google, which significantly restricted the scope for representative "class actions" to be brought on behalf of individuals for breaches of data protection law. The decision will be welcomed by data controllers, but also has wider implications for the ability of claimants to run all kinds of representative class actions (of the kind commonly seen in the USA) in the English courts.

Mr Lloyd, a consumer rights activist, sought to bring his claim against Google on behalf of 4 million iPhone users for breach of the Data Protection Act 1998 ("DPA 1998"). The alleged breach arose out of Google's use of a Safari workaround between August 2011 and February 2012, which allowed it to collect and process iPhone users' data via third-party cookies, without their consent or knowledge. Mr Lloyd argued that this loss of control of data meant that the iPhone users were entitled to be compensated under section 13 of the DPA 1998. Mr Lloyd sought permission to serve Google with proceedings outside of the jurisdiction and was refused at first instance by the High Court. The High Court's decision was reversed by the Court of Appeal, whose decision was in turn reversed by the Supreme Court.

The Supreme Court held that whilst it was, in theory, possible for a representative action to be brought in the English Courts to determine common issues on liability on behalf of a class, it would not be appropriate to award a uniform sum of damages to each class member without the need for those individuals factually to demonstrate their loss. Damages in a representative action may only be recovered on a compensatory basis, and this will inevitably involve an assessment of damages for each individual within the class – making a representative action unworkable.  Furthermore, the Court held that the mere fact of loss of control of an individual's data is not sufficient to warrant an award of damages under s.13 DPA 1998 – it is necessary to prove that material damage or distress has been suffered as a result of the breach.

The decision is likely to render pursuit of further data breach-type claims by this route economically unviable and significantly to curb a potential route for class actions more generally in the English courts.  Claimant groups are already searching for alternative avenues by which mass claims for data protection breaches may proceed, with a claim for £2.3 billion being threatened against Facebook in the Competition Appeal Tribunal, using the collective proceedings regime under the Competition Act 1998 on grounds of abuse of dominance. It remains to be seen whether this will be a viable alternative option for data breach claims.

To view our detailed briefing on the case, please click here.  To read the judgment, please click here. 

This decision of the Court of Appeal, made in the context of an attempted representative action brought against the oil company Shell on behalf of tens of thousands of alleged victims of an oil spill off the coast of Nigeria in 2011, provides yet another example of the difficulties of getting such actions across the line in England and Wales.

Representative actions in this jurisdiction are governed by CPR 19.6, which broadly provides that a claim can be commenced by a claimant on behalf of others, provided that all those in the represented group have the "same interest".  Claims brought under CPR 19.6 are effectively "opt-out" in nature (an important trait they share with their US class action cousin).  They do not require individual claimants to be joined as parties to the action or even identified individually, even though any judgment or order will be binding on all represented persons.

Here, the Court of Appeal upheld the decision of the court below to strike out the representative element of the claim, on the basis that the "same interest" requirement was not met.  In doing so, the Court of Appeal stressed that, although the cases which had been grouped together would inevitably raise common issues or fact and law, individualised factual and causation defences could, and would, be raised in relation to them.  They essentially represented a group of individual causes of action which would each need to be tried separately, and no time and costs savings would result from following the representative action route.

To read the judgment, please click here.

Hot on the heels of the Supreme Court's decision in Lloyd v Google, a blow was dealt to opportunistic claimants by this case, where the claimant's claim for breaches of data protection law was struck out on the basis that the data breach was a purely technical one, and that the claimant had suffered no loss or damage above the de minimis threshold.  The de minimis principle operates where an advantage to a litigant is so disproportionate to the expense and court resources incurred in proving it that "the game is not worth the candle".  The court was particularly scathing about a damages claim for £3,000 (with a cost estimate of £50,000) being issued in the High Court, calling it "procedural abuse".

To read the judgment, please click here.

This Commercial Court ruling confirmed the validity of interest rate swaps executed between Deutsche Bank and the Italian municipality Comune di Busto Arsizio back in mid-2007.  This was not the first decision of the English courts in relation to the swathe of swaps entered into by Italian local authorities in the mid-2000s, which many authorities have sought to challenge in the wake of the credit crunch and the impact of plummeting EURIBOR rates on the outcome of the swaps.  However, this decision followed an Italian Supreme Court decision in 2020, known as the Cattolica decision, which sets out circumstances in which interest rate swaps would be null and void under Italian law.

The central point in issue was whether Busto had capacity, as a matter of Italian law, to enter into the swaps.  The analysis turned on the interpretation of provisions of the Italian Constitution, an assessment as to whether the swaps in question were for hedging or speculative in nature, and whether authorisation from the relevant regional council was required for the transaction.  No doubt much to the relief of the banking sector, the judge sided with Deutsche Bank on all points.  However, the decision did draw attention to certain aspects of Cattolica which the Italian courts may look to revisit in due course, so this may not be the final word on the matter.

To view our detailed briefing on the case, please click here.  To read the judgment, please click here.

In these two linked decisions, the court considered a claim by the claimant buyer against the defendant sellers for breaches of warranties in a Sale and Purchase Agreement ("SPA"), pursuant to which the sellers sold to the buyer their shares in Gaia Heat Ltd.

In its main judgment, the court found that a number of the warranties given by the sellers were false.  It also affirmed that the correct measure of damages for the buyer in such circumstances was the difference between the value of the purchased shares as warranted and their true value.  In doing so, the court noted that a provision in the SPA to the effect that "the Buyer shall … take all reasonable action to mitigate any loss" suffered did not impose a higher standard of conduct on the buyer than the usual requirement to mitigate losses imposed by the common law.

In a subsequent consequential matters judgment, which is arguably more interesting, the court considered whether a contractual cap on liability for warranty claims under the SPA applied only to any damages awarded to the buyer in respect of a successful warranty claim, or whether it also captured any ancillary awards of interest and costs linked to such a claim.  In what was perhaps an unexpected decision, the court held that the language used in the cap was insufficiently broad to capture ancillary awards of interest or costs.  The decision therefore merits close examination by those involved in the drafting of liability caps in SPAs, which will likely need to contain broader language in future if they are to be sure of capturing ancillary awards of this nature.

To view our detailed briefing on the consequential matters judgment, please click here.  To read the judgments themselves, please click here and here.

In this decision, the Court of Appeal was required to construe a poorly drafted force majeure clause in a contract between the claimant seller and the defendant buyer for the sale of diesel.  The key question before the court was whether the claimant seller had to return a large pre-payment to the defendant buyer in circumstances where the claimant seller had notified the defendant buyer of a force majeure event in advance of any of the diesel actually being delivered to the defendant buyer.

The Court of Appeal determined that the terms of the clause did require the claimant seller to return the pre-payment to the defendant buyer. In doing so, it took into account the commercial context of the clause when evaluating the meaning of the (somewhat poorly drafted) words that the parties had chosen to use, noting that it would "not make any business sense for a buyer to enter into a contract which lacks a right of repayment of the advance in force majeure circumstances". 

To read our more detailed briefing on the case, please click here.  To read the judgment, please click here.

In this decision, the High Court granted summary judgment to a landlord of commercial premises in a claim for rent arrears and service charges which had fallen due over the course of the pandemic, despite the tenants having been unable to use the premises at various points because it would have been either illegal or unviable to do so due to government mandated Covid-19 restrictions.  The tenants sought to resist the application on the grounds that: (i) terms ought to be implied into the leases to the effect that the tenants' obligations to pay rent and service charges would be suspended in the circumstances; and/or (ii) there had been a failure of consideration / failure of basis.

In relation to implied terms, the court reiterated that the default position is that nothing should be implied into a contract.  The more detailed and apparently complete the contract, the stronger that presumption is.  To satisfy the test for implying a term, that term needs to either be so obvious as to go without saying or be necessary to give the contract business efficacy.  The court concluded that neither of these tests had been met.  The court then considered the issue of failure of consideration or failure of basis, which can involve the failure of a promised counter-performance but also the failure of a state of affairs on which the agreement was premised.  The tenants' argument was essentially that the ability to operate the premises as intended was a state of affairs on which the agreement was based.  The court disagreed and held that the ability to operate the premises as intended was not fundamental to the basis on which the parties had entered into the leases; it was simply an expectation which motivated them to do so.  The tenants' arguments on failure of basis therefore also failed.

To read our more detailed briefing on the case, please click here.  To read the judgment, please click here.

This Privy Council decision represents an important restatement (and broadening) of the test for granting a freezing injunction.

Convoy Collateral, a Hong Kong company, brought proceedings in Hong Kong against Dr Cho, a Hong Kong resident, for various breaches of fiduciary duties.  In support of these proceedings, Convoy Collateral applied to the British Virgin Islands (BVI) Courts for a freezing injunction against Dr Cho and a third-party BVI company, Broad Idea, of which Dr Cho was a majority shareholder.  The freezing injunction against Dr Cho and Broad Idea was granted at first instance, but later overturned by the BVI Court of Appeal.  Convoy Collateral appealed the Court of Appeal's decision. The Privy Council concluded that in circumstances where there were substantive proceedings against Dr Cho in Hong Kong and the BVI court had undoubted jurisdiction over Broad Idea (due to the company being incorporated in the BVI), it had the power to grant a freezing injunction against Broad Idea if it was required to protect Convoy Collateral's ability to enforce a future judgment against Dr Cho in the BVI. However, on the facts, it was decided that the Court of Appeal had been justified in setting aside the freezing injunction against Broad Idea as there was no reasonable basis for asserting that Dr Cho had any direct beneficial interest in any of the assets held by Broad Idea.

In considering the circumstances in which a freezing injunction could be granted, the Privy Council dispensed with the previous requirement for the relief to be linked to a pre-existing cause of action and adopted a wider test, finding that a freezing order can be granted when a court is satisfied with a sufficient degree of certainty that a right to bring proceedings will arise and that proceedings will be brought.  In recasting the threshold for granting freezing relief, the Privy Council had in mind the ease and speed with which financial assets can be moved around the world, the growth in the use of offshore companies and the consequent development of international litigation and arbitration.  Although this judgment is not binding on the English Courts, it is likely to be very persuasive as a useful basis for future freezing injunction applications.

To read our more detailed briefing on the case, please click here.  To read the judgment, please click here.

This Court of Appeal decision highlights one of the key elements that a potential claimant must satisfy in order to succeed in an application for Norwich Pharmacal relief.  This type of application allows a potential claimant to obtain third party disclosure where (a) a legal wrong has arguably been committed, (b) the disclosure sought is likely to enable the potential claimant to bring a claim against the wrongdoer, and (c) the person from whom disclosure is sought must be more than a 'mere witness'; they must have facilitated the wrongdoing somehow.

In this case, EUI had provided a policy holder with a home insurance policy for a property which was subsequently damaged by water.  The policy holder could claim for the cost of alternative accommodation, which was capped where the policy holder was staying with relatives.  EUI believed that the policy holder had acted fraudulently when he had informed EUI that his parents were not living at a property that he had moved into, and EUI sought disclosure from Vodaphone to ascertain the true location of the policy holder's parents for the relevant period of time.  EUI argued that Vodaphone was not a mere witness, given that mobile phones have enabled people to live in one place but conduct their affairs as if they were somewhere else.  The Court, however, considered that this fact did not implicate Vodaphone in the alleged wrongdoing.  This case provides a helpful reminder of the limits of Norwich Pharmacal relief and the relative stringency of the mere witness rule.

For further information, please see our detailed briefing on the case here.  To read the judgment, please click here.

In this case, in which the claimant sought damages from TUI for holiday sickness, the Court of Appeal had to consider the correct judicial approach to expert evidence that was uncontroverted and unchallenged.  Whilst the circumstances of this case are unusual, it provides important reminders of best practice on how expert's conclusions and opinions should be presented and challenged.

The claimant relied on evidence from two medical experts, but TUI did not adduce any expert evidence.  A divided Court of Appeal held that there was no hard and fast rule that an uncontroverted expert's report which complied with CPR PD 35 could not be rejected by the court.  Instead, the court had to adopt a more nuanced approach to such evidence, taking into account the circumstances of the case, the nature of the expert report itself and the purposes for which it was being relied upon in the claim.  The majority also held (with one judge strongly dissenting on this point) that a party could challenge expert evidence in closing submissions even when they had chosen not to adduce contrary evidence or to cross-examine the expert in question.

For further information, please see our detailed case briefing here.  To read the judgment, please click here.

This case involved a dispute amongst members of the band, The Sex Pistols, as to whether the consent of all band members was necessary in order for the band's music to be used in a TV series.

In putting forward his case in relation to the matters in dispute, one of the band members, John ("Johnny Rotten") Lydon, sought to rely on a chain of communications passing between representatives of the band members in connection with an earlier dispute between them on a similar topic in 2014.  All of the communications in the chain save for the very final communication were marked as being made on a "without prejudice" basis.  Mr. Lydon sought to argue that that final communication, which lacked the "without prejudice" label, should be treated as having been made on an open basis, such that he could rely in court both upon the communication itself and on the failure of certain of the other band members to respond to it at the time it was sent.

The court held that the final communication in the chain should be treated as "without prejudice" despite not being labelled as such.  In doing so, it confirmed that, where a series of communications is expressed to be made on a "without prejudice" basis, a party must express a clear intention to move the discussions onto an open footing before without prejudice privilege will cease to apply.  A simple failure to label a single communication in the series as "without prejudice", in circumstances where that communication clearly represents a continuation of the prior without prejudice discussions, will not constitute a sufficiently clear statement of intent for these purposes.  The case does still, however, represent something of a warning to parties to ensure that they label their settlement communications appropriately.

For further information, please see our detailed case briefing here.  To read the judgment, please click here.

Many of us are familiar with the facts of this tragic case. It concerns a fatal road accident in Egypt in which Sir Ian Brownlie and one of his daughters were killed and the claimant, Lady Brownlie, was seriously injured.  The Supreme Court was asked to determine whether Lady Brownlie could serve her claim out of the jurisdiction on the defendant, an Egyptian company.  The judgment is notable because it widens the scope of "damage" which will be sufficient for the tort jurisdictional gateway, in the context of personal injury cases.  The scope is not restricted to the damage which completes a cause of action, nor to direct damage sustained within the jurisdiction.  Rather, damage may be suffered in more than one place and includes the financial or physical consequences of the tortious conduct where they continue to be suffered in England and Wales.  Acknowledging the wider interpretation and the potential for increased claims, Lord Lloyd-Jones noted that the requirement to show that England and Wales is the appropriate forum to hear the dispute will "provide a robust and effective mechanism for ensuring that claims which do not have their closest connection with this jurisdiction will not be accepted here."

The Supreme Court also considered the pleading and proving of foreign law, in the context of deciding whether the claims have a real prosect of success.  The court drew a distinction between the "default rule" and the "presumption of similarity".  The former treats English law as applicable where foreign law is not pleaded by the parties.  In this case, it was accepted by the parties that Egyptian law applied to the claims and so there was no scope for applying English law by default and the claimant had to show that her claims had a real prospect of success under Egyptian law.  The presumption of similarity is a "rule of evidence concerned with what the content of foreign law should be taken to be".  In short, where there are omissions in the proving of foreign law, the court may, if it is a fair and reasonable on the facts, presume that the "content of the applicable foreign law is materially similar to the English law on the matter in question."  Helpful guidance on the applicability of the presumption are provided from paragraph 143 of the judgment.

To read the judgment, please click here.