Lacuna in the logic
It’s what they do, their prime job, but is there a problem, a lacuna in the logic? Courts adjudicate on contracts, but how good are their tools for doing so? Is there a fault in their methodology? If there is, the answers that they come up with will be wrong. If that’s so, it will affect every business and person in the country.
The best exposé of what the courts do is this:
The methodology is not to probe the real intentions of the parties but to ascertain the contextual meaning of the relevant contractual language. Intention is determined by reference to expressed rather than actual intention. The question therefore resolves itself in a search for the meaning of language in its contractual setting. That does not mean that the purpose of a contractual provision is not important. The commercial or business object of a provision, objectively ascertained, may be highly relevant: see Prenn v. Simmonds [1971] 1 W.L.R. 1381, 1385b, per Lord Wilberforce; Reardon Smith Line Ltd. v. Yngvar Hansen-Tangen (trading as H. E. Hansen-Tangen) [1976] 1 W.L.R. 989, 996, per Lord Wilberforce. But the court must not try to divide (sic) the purpose of the contract by speculating about the real intention of the parties. It may only be inferred from the language used by the parties, judged against the objective contextual background. It is therefore wrong to speculate about the actual intention of the parties ……… The question is whether the prima facie meaning of the word is displaced by the context of this policy. It can only be displaced in one of two ways. First, it may be displaced if the prima facie meaning turns counter to the commercial purpose, objectively ascertained, of the clause or policy…… There is no discoverable single purpose which could serve to displace the prima facie meaning of “persons.”
DEUTSCHE GENOSSENSCHAFTSBANK -v- BURNHOPE & ORS. (Lord Steyn)
This is a perfectly workable methodology for analysing single contracts but creaks when it comes to a complex of contracts that has an overall purpose that may not be present in each of them. The problem here is that the court may not be able to divine any intention when focusing in upon one particular contract, and certainly not the overall intention of the deal being done. A bit like asking the purpose of a cog in a complex clock, focus too closely and you miss everything. And the result of this? Well select the wrong cog and the whole clock will not work.
See also a real-life example of this (that I recently wrote about) in the New Law Journal.
But the latest faux pas
It appears that the legal profession is still not on top of electronic disclosure. The latest example appears to be Phaestos Ltd. & Another –v- Ho.
There have been plentiful judgments in this case this year (7 at the last count) and now the latest shows why. There has evidently been a big dispute about disclosure of documents as well as the particularisation of the Claimant’s case.
In the latest judgment the court evidently lost its patience with the Claimants on their e-disclosure attempts, saying:
It is unnecessary to review the remainder of the period up to date because one can only form the view in logic that the lack of activity on the part of the Claimants … can be explained only by gross carelessness or a reckless disregard or deliberate flouting of the Court orders: I can not decide which.
Looking from the outside it is always difficult to see the true causes, but disclosure is an area where solicitors are expected to be proactive (they should not just “take their client’s instructions”).
As long ago as 1968 the courts made it clear what was expected:
In preparing for trial solicitors bear a great responsibility and a heavy burden. Not the least of these burdens is that of discovery. This is of especial weight in a complex case of passing off such as this was. Many litigants (and not least corporate litigants) have little appreciation of the scope of discovery, and the duty of making full disclosure.
Rockwell Machine Tool -v- E. P. Barrus (Concessionaires) Ltd.
And later the Court of Appeal in 2003:
… it is the solicitor who is in charge of deciding what documents are or are not to be disclosed and he cannot hide behind his client's instructions. If he cannot persuade his client to comply with what is right in the circumstances, the solicitor must withdraw from the case.
Eric Albert Wagstaff -v- Florence Gladys Colls
The wake-up calls on e-disclosure were Hedrich -v- (1) Standard Bank London (2) Zimmers and Digicel -v- Cable & Wireless but there have been several faux pas from solicitors since. Phaestos is apparently the latest.
Toe-to-toe conflict
Sometimes one needs a very “old-fashioned” case involving a “full-blooded conflict” between the parties to straighten out the law. If so Walter Lilly & Co –v- Mackay and DMW Developments is just that.
The judgment came out on 11 July and touches on those classic problems of concurrent delay in extensions of time and global claims.
In a mammoth judgment Akenhead J. covers both these recurring questions in detail (see paras 366 to 370 for concurrent delays and 474 to 491 for global claims). The judge also gives a clear impression of the personal conflicts that pervade this particular project.
Technology Court cases down
What can the number of cases reaching judgment in the Technology Court tell you about the state of the UK construction industry? Well the bare facts are these, we are now half way through the year and the number of cases showing up on the semi-official BAILII website is half that of last year. So something dramatic appears to be happening.
The cause of this steep fall may well be the contentment with the state of adjudication and the lack of any realistic arguments on enforcement. However this fall coincides with the first few months of the new Construction Act’s operation, which includes substantial new and changed rules – so may be not.
Alternatively the very interesting EC Harris report “Global Construction Disputes 2012: Moving in the Right Direction” may hold the key.
As widely reported, UK construction disputes are increasingly expensive and complicated, mainly due to failures to administer contracts properly. Is this putting off participants litigating at all?
Prima Facie’s underlying ethos is that money invested in avoiding disputes is money well spent. The process of dispute resolution, in whatever form, is innately uncertain and full of major and sometimes existential risks to the enterprise that are near impossible to measure. Perhaps that is why the figures are down.
The rise of the machines
James Cameron’s third in the trilogy of Terminator movies tells of the rise to pre-eminence of the machine over man. Likewise Moore v. Publicis Groupe, a US case that came out on February 24 2012, could mark the beginning of the end for the hard slog (and massive lawyer's fees) for disclosure (discovery), for it endorses (in suitable circumstances) the use of “black box” technology to “assist” the lawyers in that review.
We will have to wait to see how it is received in this country but I attended the major IQPC Conference last week where Master Whitaker (one of the gurus of e-disclosure) described the use of such assistance as “pragmatic and proportional” and “at least as accurate as human review”. Watch out boys Arnie is on his way.