A ‘right to light’ is an easement that gives a landowner the right to receive natural light through defined apertures (e.g. windows) in buildings on their land. These rights are valuable, as they give landowners (and their purchasers) certainty that they will continue to enjoy natural light.

The review will look at whether the current law on how rights to light are acquired and enforced provides an appropriate balance between those landowners who benefit from the rights and those who want to develop in the vicinity of the land. It will also examine the inter-relationship between the planning system and rights to light, and whether the remedies available to the courts are “reasonable, sufficient and proportionate.”

The announcement of the review is good news for developers.

Developers have faced a lot of uncertainty since the September 2010 ruling in HKRUK II (CHC) Ltd v Heaney, when the High Court awarded an injunction against a developer who had infringed the right to light of a neighbouring commercial property, despite the development having been completed. The Court held that the payment of damages was not necessarily an appropriate recompense for interfering with a landowner’s right to light; consequently, the removal of a structure, or part of a structure, is now possible. The ruling highlights how important it is that developers resolve any potential rights of light issues before commencing their development. 

However, it should be noted that the ruling didn’t change the law and, therefore, the decision in each case will always be dependent on its own facts. Further details of the ruling are here.

Whilst the review is welcome, any change to the law is some way off.

The review will begin in 2012, with a consultation paper expected to be published in 2013. A final report and draft legislation could be available by late 2014 or early 2015.

In 2009, the High Court ruled in Internet Broadcasting Corporation (t/a NetTV) v Mar LLC (t/a MARHedge) that there is a rebuttable presumption that an exclusion clause should not apply to a deliberate personal repudiatory breach of a contract. In that case, the High Court ruled that extremely clear drafting would be needed for a court to rule that the parties intended an exclusion clause to cover a deliberate personal repudiatory breach. The Court had said that there was a presumption that a party would not intend to limit their liability for really serious deliberate breaches (such as deliberately walking away from a binding contract).

What happened in this case?

In this case, AstraZeneca (AZ) and Albemarle International (AI) entered into an agreement for AI to supply a product called DIP to AZ that AZ then distilled to produce propofol. AZ foresaw that it might, at some point in the future, be more beneficial to be supplied with propofol rather than DIP, and the agreement contained a provision that, if AZ did want to make such a change to its process, it would give AI first refusal on the supply of propofol.

AZ later told AI of its intention to enter into an agreement with a third party (“S”) for the supply of propofol. AI objected as it wanted to continue to supply and cited the first refusal provision in the agreement. Negotiations ensued, but, despite AI matching the third party offer of supply, no agreement was reached, and AI served notice to terminate for AZ’s breach of the first refusal provision which had not been remedied on demand. During the negotiations, AZ attempted to stockpile the goods, whilst AI refused to supply two additional orders made by AZ under the agreement, although this did not affect AZ’s operations. Things got rather messy as allegations were thrown around about who was breaching the agreement.

AZ issued proceedings against AI for breach of contract as AI had failed to supply the two additional orders. AZ argued this was a repudiatory breach entitling AZ to terminate the agreement and claim damages. AI denied the claim, and further argued that any liability it might have was, in any case, limited by an exclusion clause in the agreement. AZ argued that AI could not rely on the exclusion clause because (following the ruling in the NetTV case) the breach was deliberate and repudiatory. AI then counter-claimed for breach of contract due to the alleged failure to give it first refusal on the right to supply propofol, but AZ denied liability.

The ruling

The High Court ruled that AI was, on the facts, in breach to AZ for its failure to fulfil one of the two additional orders and was liable in damages for that breach. However, it went on to rule that failure in respect of one or two orders did not amount to a repudiatory breach of a minimum three year contract.

Meanwhile, AZ was also liable for failing to honour the first refusal provision and AI was entitled to terminate the contract as a result of that breach. However, despite that liability, the High Court had to decide whether the exclusion clause excluded or limited the liability of either party and in particular whether AI could claim for its loss of profits despite an apparent provision excluding liability for lost profits. Meanwhile, although AI’s failure to supply was not serious enough to be repudiatory and although the breach was not deliberate (as AI had had legal advice that suggested that it would not be breaching the agreement in the circumstances by failing to supply), the court went on to consider the issue of deliberate repudiatory breach anyway.

Right of first refusal

Where AZ had decided to move to buying propofol rather than DIP and it was considering an offer to supply from a third party, AZ was under an obligation to provide AI with full details so that AI could match the opportunity. Of course, issues may arise in the course of negotiating that could mean that AI would not supply on the terms offered by S, but if AI was willing to match the terms that AZ was minded to accept from a third party (as happened here) then AZ was obliged to accept AI’s offer. The right of first refusal clause had to mean something. AZ was obliged to provide full disclosure of the terms of the proposed deal with S and act in good faith to AI. The only sensible construction of a right of first opportunity was to give AI sufficient opportunity and right to match the offer and not just as AZ was about to award the contract to S. AZ was in breach of the right of first refusal clause, and AI had rightly given AZ 30 days to remedy the breach and then rightly terminated the contract when the breach was not remedied.

Waiver

The court added that AI’s willingness to continue negotiating after that 30 day period had expired did not amount to a waiver of its rights. It could still terminate despite not exercising that termination right immediately.

Deliberate Repudiatory Breach

The High Court ruled that, if there had been a repudiatory breach by AI, it had not been deliberate as AI had followed legal advice that it was acting within its contractual rights (albeit the legal advice had been incorrect). As such, there was no question that the exclusion clause applied and limited AI’s liability. However, the Court went on to consider what would have been the position had the breach been deliberate and repudiatory. It said that the decision in NetTV had in fact been misguided, and that deliberate repudiatory breaches should not be treated any differently from any other breach. The High Court said that, although it was not necessary to consider whether or not an exclusion clause applied to a deliberate personal repudiatory breach, it would be inclined not to follow the NetTV ruling if it did.

Limited “Contra Proferentem” interpretation of exclusion clause in relation to breach of right of first refusal provision

The exclusion clause said “No claims by AZ of any kind whether as to the products delivered or for non-delivery of the products, or otherwise, shall be greater in amount than the purchase price of the product…; and failure to give written notice of claim within 60 days from the date of delivery, or in the case of non-delivery, from the date fixed for delivery, shall constitute a waiver by AZ of all claims with respect thereto. In no case shall AZ or Albermarle be liable for loss of profits or incidental or consequential damages.”

AZ argued that it was not liable for AI’s lost profits arising out of its breach of the right of first refusal provision. However, the Court ruled that, in line with English law rules of interpretation on liability clauses, the exclusion clause had to be construed against the party seeking to rely on it if there was the slightest bit of doubt in the meaning (a rule known as “contra proferentem”). AZ’s interpretation would have meant that the first refusal provision would have been no more than a statement of intent, leaving AZ with no incentive to comply with it, which a court would always seek to do everything to avoid if there is no alternative construction.

In this case, the alternative construction was that the second sentence in the exclusion clause (ie the exclusion of lost profits) had to be read in the same light as the first sentence within the same paragraph – ie applying to late or non-delivery of DIP products. On that interpretation, it was not intended to deal with loss of profits arising out of not giving AI the opportunity to supply propofol.

Comment

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments, “This ruling is important because it deals with four important issues relating to commercial contracts – deliberate repudiatory breach, the meaning of rights of first refusal, waiver during contract negotiations and contra proferentem.

 ”The ruling in NetTV stated that deliberate repudiatory breaches can, in some circumstances, be covered by an exclusion clause but only if express words are used. This ruling suggests the opposite, in that liability would be restricted or excluded for deliberate repudiatory breach just as much as with other forms of liability. Those comments are not strictly binding on future cases, as the High Court did not need to make a ruling on that issue, as it had already ruled that the breach was not deliberate or repudiatory anyway. This uncertainty is not particularly helpful for businesses that need to know how to draft contracts going forward, but the best advice would be to draft appropriate wording to reflect the level of risk the parties are willing to take and not leave it to the courts to decide.

“The part of the ruling dealing with the narrow interpretation of an exclusion clause against the party seeking to rely on it – the ‘contra-proferentem rule’ – which meant that breach of the right of first refusal provision in the agreement was not covered by the exclusion clause is actually just a very useful reminder of existing rules. Exclusion clauses should be professionally drafted by specialist lawyers. A party to a contract should play devil’s advocate when drafting an exclusion clause and try to understand what a court might see from the outside looking in, rather than just looking on what might be beneficial for the business itself.

“The interpretation of the phrase “right of first refusal” was also extremely useful. That phrase is sometimes used in a contract but this ruling gives real insight into what that actually means.

“Finally, the decision that one party had not waived its rights of termination when it continued to negotiate for a few weeks in good faith was also helpful.

“All in all, this is a major judgment that affects all commercial dealings. We will have to see, though, whether the ruling will be appealed.”

The new Act would consider the perception of the average consumer and aggressive practices would be defined by reference to coercion, abuse of power or harassment. The consumer would have to prove aggressive or misleading practice had occurred, it was likely to cause an average consumer to decide to enter a contract or make a payment that they would not otherwise have done and the practice was a significant factor in that particular consumer’s decision.

The remedies involved would include a right to unravel the contract, get a refund, have a reduction in price and obtain damages for provable losses. A trader could avoid damages if he could prove that he took all reasonable precautions to avoid committing the offence.

The ECHR ruled that, under the European Convention on Human Rights, the media was not obligated to give any such prior notice. The ECHR went on to say that someone’s right to privacy was protected by access to the courts to claim damages and the ability to obtain an interim injunction. In any event, if pre-notification was to be imposed on the media, the media would have to be allowed a ‘public interest’ exception which would give the media the opportunity to publish whatever they wanted provided they could support their claim that it was in the public interest. Pre-notification would have to be enforced with a fining system, in which case the media could always decide to publish a story in the belief that the benefits of publishing outweighed the impact of a fine. Therefore, the ECHR stated that even if a failure to obtain pre-clearance was an infringement of someone’s human rights (which they did not consider to be the case), any notification system would have serious pitfalls anyway which may render it practically useless.

Max Mosley has the right to appeal but it is, as yet, unclear whether he will do so. He may just have to accept that he has lost this particular race.

Atos failed to fully understand the complexity of De Beers’ requirements, resulting in significant delays to the project, but this was due, in part, to De Beers’ inability to finalise the scope of the project. There was misunderstanding on both sides and the project did not progress as well as had been hoped. As a result of the delays, De Beers decided to withhold payment of an interim invoice.

In response, Atos Origin refused to continue work on the project unless the contract was renegotiated, as it believed that the project had altered substantially in cost, specification and deadline. Atos Origin demanded that the contract be renegotiated to reflect the change in scope. Although negotiations took place, a variation to the original agreement could not be agreed and no further work took place.

Both parties claimed that the other had repudiated the agreement, breaching its terms by indicating that they no longer wished to be bound by it.

The High Court ruled that both parties had contributed to the failure of the contract. De Beers had not had a right to withhold payment of the interim invoice, but that non-payment did not amount to a repudiatory breach. However, in stopping its performance of its obligations under the contract, Atos Origin had committed a deliberate and wrongful breach of contract, which amounted to a wrongful repudiation of the agreement.

The High Court noted that Atos Origin did actually have a right under the contract to suspend work whilst waiting for De Beers’ payment, but the way in which Atos Origin communicated the threat to suspend services was an indication that Atos Origin was not willing to continue on the terms of the existing agreement, and would only proceed on their own terms.

The High Court ruled that De Beers was entitled to recover £4.4 million to cover the cost of modifying its old software system and purchasing a replacement system, less costs it would have incurred had Atos Origin not terminated the contract, totalling nearly £3 million. As such, Atos Origin was liable to pay De Beers some £1.4 million in damages, not including any claims for interest.

Simon Weinberg, a solicitor at Matthew Arnold & Baldwin LLP and assistant editor of Upload-IT, comments: “This case shows how important it is to be realistic and to have clear intentions in negotiations over an IT contract, together with commercial sensitivity in any subsequent renegotiation or variation. Suppliers must understand their customers’ requirements and ensure that they have the necessary expertise to fulfill their obligations under any agreement they enter into. At the same time, customers must limit the risk they expose themselves to, making sure that they participate in their project and that they are doing as much as possible to prevent the failure of the project.

“Here the High Court ascribed blame to both parties, and could so easily have ruled that no damages were payable. Business-critical IT contracts are essential to any business and can be expensive. It makes sense to negotiate them properly and to ensure the parties’ expectations are properly reflected in a clear written contract.”

The High Court originally and now the Court of Appeal decided that a contract had been formed between the parties. It was a question of construction as to whether the further contract to be executed was a condition of the contract being formed or a mere expression of the contract already agreed. The Court referred to D’s acceptance of the quotation with the statement that D “hereby accept the terms of your quotation subject to your Board approval” as showing that the only condition for the contract proceeding was C’s board agreeing to the deal. This was clearly done because C accepted D’s offer. Therefore, C’s statement that a formal contract would follow in due course was merely an indication that the parties’ contractual desires would be reflected in a further document.

This case could have been decided either way. On the facts, the courts decided that the parties had intended for a contract to have been formed. It was the change in circumstances to D that led to D’s claims. However, instead of the parties spending large legal cost, wasting management time and incurring aggravation and uncertainty in going to the Court of Appeal, the situation could have been avoided if the contract wording and processes had been clearer.

The case of Nicholas Prestige Homes (“NPH”) particularly shows that buyers (in this case, of residential property) must take care when dealing with suppliers of goods and services by email in order to avoid making expensive mistakes.

In this case, NPH’s claim for damages was upheld after it was found that the seller of the property had entered into a sole agency agreement with NPH by email but had then gone on to sell her property through a third party agent.  Although the seller, Mrs Neal, had argued that there was no contract in existence with NPH, the court held that a contract did in fact exist and had been entered into by email (see details below).  The contract with NPH had been breached because the seller had continued to instruct a third party estate agent and breached the sole agency clause of her contract with NPH. 

Facts

In 2006, the Defendant, Mrs Neal, had been trying to sell her property.  After having instructed several estate agents who did not find her a buyer, Mrs Neal entered discussions with NPH about selling her property.   On 24 November 2006, Mark, an employee from NPH, sent Mrs Neal an email which said:

“Further to our meeting yesterday (23 November 2006) we write to thank you for your instructions and confirm the agreed arrangements….”

NPH’s email then went on to state that:

• NPH was to be appointed on a multi-agency basis until 31 December 2006 during which time Mrs Neal would disinstruct all other agents save for Mssrs Plum Property who would cease marketing the property from 1 January 2007;
•  NPH would then have sole selling rights from 1 January 2007. 
• Both sets of terms required Mrs Neal to pay NPH commission if at any time, contracts for the sale of the property were exchanged with a buyer that NPH had introduced in any way to the property during its agency period.
•  NPH’s sole agency agreement would last for a period of 16 weeks and would continue until terminated by giving 21 days’ written notice.  During the 16 week period, the seller would not market the property for sale privately or instruct any other agent to market or sell the property.

 On 28 November 2006 Mrs Neal sent a reply to NPH’s email of 24 November in which she said:

“Hi Mark, that’s fine, look forward to viewings.”

It is to be noted that Mrs Neal’s response, which accepted NPH’s earlier email, was a direct reply to NPH’s email of 24 November 2006 and was not a new and freshly created email.

The property was actually sold through Plumm Properties to a buyer who had initially contacted NPH and then Plumm Properties.  When NPH subsequently claimed £10,883 in commission, Mrs Neal argued that there was no contract between them and that she had never intended to bind herself to a sole agency agreement with NPH.  Mrs Neal had not fully read the email from NPH nor the attachments sent with it,  which related to both its sole and multiple agency terms.

The First instance decision

At first instance, the judge found that there was a contract between NPH and Mrs Neal which Mrs Neal had entered on 28 November 2006 on the terms  set out in NPH’s e-mail of 24 November 2006 and which Mrs Neal had accepted in her e-mail reply of 28 November 2006.  However, the judge dismissed NPH’s claim for commission, since he said that NPH had not caused the sale of the property.

NPH appealed this decision on an alternative claim of breach of contract and argued that Mrs Neal had breached the contract by continuing to appoint other agents who were eventually the cause of the sale of the property. NPH claimed the amount of £10,883 which it said it would have received on the sale of the property, had Mrs Neal not instructed Plumm.

The Court of Appeal Decision

The Court of Appeal allowed the appeal and Lord Justice Ward gave the leading judgment. Ward LJ upheld the finding of the first instance judge and found that there was a contract made by the two e-mails and proceeded on the basis that a sole agency agreement existed between NPH and Mrs Neal. He said that it was plain that during the period for which NPH had sole selling rights, NPH was to be the only person marketing the property.

However, because Plumm had remained instructed until 20 January 2007, the eventual purchaser had dealt with them and not NPH. Therefore, Ward LJ found that there was a breach of the express term of the contract that no other agent should be instructed, given that the e-mail term had expressly stated that Plumm was to cease marketing the property from 1 January 2007.

Accordingly, Ward LJ held that NPH was entitled to damages for loss of chance. NPH had lost the chance of earning the commission and if Plumm had not been instructed, the same sale would surely have been clinched by NPH. The “lost chance” was assessed at 100% and NPH was awarded damages of £10,883.

The High Court ruled that all the losses were direct losses. The supplier was therefore liable for all the damages claimed.

There is nothing startling about the result. What is surprising is that many suppliers are still under a misapprehension about how much they are covered by a crucial clause which seeks to limit their exposure for something going wrong. A lot of businesses think that economic losses are indirect and they are therefore not liable for them. This is wrong. Physical damage or economic loss (such as loss of profits, loss of revenue, loss of reputation, etc) can be either direct or indirect. It depends on the circumstances according to an interpretation based on a legal case from 150 years ago.

Liability clauses go to the heart of why businesses have contracts – in order to give certainty. However, many people are trading under a misunderstanding of the level of the risk that they have accepted.

Although Bristol Crown Court had sympathy with the hotel owners’ religious beliefs, it agreed with the claims made against them and awarded damages. The court said that the owners had not been simply treating unmarried couples of heterosexual or homosexual persuasions in the same way. The guests had entered a civil partnership and discrimination law said that civil partnerships should be treated the same as marriages.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments: ‘This case is a reminder that discrimination law is not just something that businesses should be wary of in an employment context. Businesses also need to avoid discriminating against their customers.’

The Commission had called for tenders to update its machine translating systems. Unfortunately, in so doing, it was stepping all over Systran’s copyright and know-how. Although the terms of the earlier contract between the Commission and Systran had not been clear, the Commission was still infringing the intellectual property rights. The fine represented €7m for the fees which Systran would have charged the Commission for permission to use its intellectual property rights, and a further €5m for the other effects on Systran’s turnover.

Not so, said the High Court. The judge said that the number of people who saw the original Tweet was only one factor. The Jameel type abuse of process did not depend on mere numbers. Cairns had lived in the UK and expected to do so again; this was a factor. It was also noted that the original Tweet may be forwarded and therefore more widely disseminated. The measure of damage was about more than just the numbers who originally saw the post.

So, in summary, it’s jut not cricket if someone is defamed, and the wider impact should be looked at. Don’t just consider the effects of the original Tweet. But consider the Tweet, then repeat Tweets, and the wider damage caused.

The claimant provided distance learning courses, and the defendant ran a website which hosted bulletin boards and forums. The claimant had proved that the courses in question were genuine and legitimate, and therefore the claims made in the postings were false. When asked to remove the postings, the defendant refused to do so. The court had already awarded judgment in default to the claimant.

The court now had to rule on the damages issue. The defendant’s website had a large number of visitors (about two million unique visits per month) and it had refused to remove the offending material. The claimant was not able to show loss of specific business but it had a number of questions from students as to the allegations. The applicable level of damages in this case was set at £50,000 to represent the amount that the claimant required to vindicate its reputation and demonstrate that the postings were false.

Mr Justice Tugenhadt ruled in the High Court that an injunction be imposed to prevent the disclosure of information by the applicant’s ex-wife. She had claimed that she had had a sexual relationship with the applicant after he had remarried, and she had leaked certain details to a newspaper. An interim injunction and anonymity order had previously been granted by the court, in relation both to the respondent and the newspaper in question. The applicant also claimed that he had been blackmailed by his ex-wife, with the threat that more information would be disclosed if the applicant did not pay her a sum of money.

The ruling stated that there was credible and uncontradicted evidence that the respondent had threatened to disclose information about the applicant’s private life which the public had no right to know and the respondent had no right to publish or disclose. Damages would not be an adequate remedy, specifically in relation to the effect that such disclosure might have on the applicant’s private life, and others whose private lives would be affected. It was also ruled that the applicant was likely to establish at trial that the disclosure should not be allowed.

The anonymity order was also granted on the basis that the TV star’s privacy rights under article 8 of the European Convention on Human Rights (which were also in the public interest by preventing and punishing blackmail) outweighed the free speech rights of the ex-wife under article 10. The Convention forms part of English law through the Human Rights Act 1998.

As for the facts of the case itself, provided the anonymity is retained, it sounds like it would make a good plot for a television drama. Presumably, though, the applicant in this case would not be interested in playing the lead male role!

The owner of land with the benefit of a right of light against other land is entitled to an injunction against someone committing a wrongful act which interferes with the right of light. A court has discretion to award damages in lieu of an injunction.

This case involved a Grade II listed former bank, which had five floors and was owned by the dominant owner (O) having a right of light. A building across the road from the bank  was erected in about 1980 (Building A) and originally built with six floors. This building was owned by a developer (D) who wanted to build two additional floors on top of Building A. D was advised that the proposed development would cause an actionable loss of light to the bank, and that D should negotiate with O that O would not bring a claim against D.

Negotiations were unsuccessful and, during this time, O threatened to apply for an injunction, although no proceedings were issued. The redevelopment of Building A  was completed in July 2009.

In August 2009, D applied for a declaration that it was free from any liability to O. O counterclaimed for an injunction or damages. The parties agreed that:

●        O had a right to light.

●        D had interfered with O’s easement.

●        O was entitled to a remedy.

The issue to be determined was what remedy O was entitled to: an injunction requiring D to cut back the works to Building A, or damages?

Decision:

O was granted an injunction. In reaching its decision, the court looked at the principles set out in the cases of Shelfer v City of London Electric Lighting Company [1895] 1 Ch 287, and Regan v Paul Properties Ltd and others [2006] EWCA Civ 1319:

●        A claimant is, prima facie, entitled to an injunction against a person committing a wrongful act interfering with a legal right.

●        The person committing the wrongful act cannot ask a court to sanction his actions by buying out the legal right by the payment of damages assessed by the court.

●        The ability to award damages in lieu of an injunction, does not mean that the court should act to “legalise wrongful acts” because a defendant is willing to pay damages.

●        The judicial discretion should not be exercised in a way that deprives a claimant of his legal right “except in very exceptional circumstances”.

It was relevant to consider whether:

1 the injury to the claimant’s legal rights was small;

2. the injury could be estimated in money;

3. the injury could be adequately compensated by a small money payment;

4. it would be oppressive to the defendant to grant an injunction;

5. the claimant had indicated that he only wanted the money;

6. the conduct of the claimant rendered it unjust to give him more than financial relief; and

7. there were any other circumstances that justified the refusal of the injunction.

The court followed Jacklin v The Chief Constable of West Yorkshire [2007] EWCA Civ 181, by stipulating that, in order to avoid the grant of an injunction, a defendant must show that all four of points 1 to 4 above had been satisfied.  The court decided that not all four points were satisfied:

The court accepted that although the injury to O was not small, good light was relatively more important in a home than in industrial or commercial premises. However, the character of the bank, the investment made in restoring it and the extent that the works had reduced the flow of light to the bank together showed that real damage had been suffered.

The court held that O’s loss was capable of being calculated in monetary terms.

The court stated that it would have assessed damages at £225,000, which it did not consider to be a small amount.

The court held that it would not be oppressive to grant an injunction, since:

- The infringement was not trivial.

- The infringement was carried out in the knowledge that it was actionable.

- The infringement was carried out with a view to profit, not necessity.

- It would have been wrong for the court to sanction what had been done by compelling O to take monetary compensation which O did not want.

Comment:

Developers should not consider such rights lightly and should resolve these issues before commencing any development, since this decision challenges the accepted view that it is difficult to obtain an injunction once a development has been completed. This decision is likely to cost the developer greatly in having to remove the top two floors of the building.

The High Court agreed that Etihad’s delay of about 10 weeks from finding out all the facts on which it relied for termination to the date of termination was too long. This was despite there being a ‘no waiver’ clause in the contract which had said that neither party waives the right to exercise rights under a contract by delay, as no waiver clauses only help and do not work indefinitely.

The Court of Appeal has now reversed the High Court’s decision. How long would amount to affirming the continuation of the contract is a question of fact based on the facts of the case. However, the Court of Appeal gave some very useful guidance. It said that the position would depend on:

• How clear the breach is to the innocent party.
• Whether the timing of the transaction was of the essence. Someone selling perishable goods would need to know the position very quickly.
• Whether silence and doing nothing would be misleading and make the other party assume the contract was continuing.

In this particular case, Etihad had held discussions and meetings with Force India to try to resolve things between mid-November and mid-January. Etihad terminated a couple of weeks after it was not satisfied with the proposals being offered in the discussions. It had been fair for Etihad to consider its position. Force India would have known that Etihad was considering its position. In addition, the delay had occurred during a break between Formula One seasons, so there had been no urgent need for a quick decision. In this case, a delay of about three months had not been a problem.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin and editor of Upload-IT, comments: ‘Each case turns on its own facts, but this decision is very useful. When an innocent party finds out that the other party has seriously breached the contract, it is left in a difficult position. It might want to terminate the contract, but if it wrongfully terminates because the other party’s breach is not serious enough then the supposedly innocent party could be the one acting wrongfully. The stakes are therefore high. The innocent party may want to consider its position and also see if it can still work things out with the other party. However, delay can prove fatal to exercising those rights.

‘This case sets out useful guidance as to whether a delay would be too long. There are also useful things that parties can do in practice to enhance their position. In general, having a well-drafted ‘no waiver’ clause in the contract should help. In addition, when a breach happens, the innocent party can take steps to show that it is considering its position so that the other party cannot assume that there has been a waiver based on silence, and that there is no urgent need for a decision (which the breaching party’s failure to disagree with may confirm). There are other steps that the party in breach can do too to protect its position. For more advice on a particular situation, please contact us.’

The High Court did not see the merit in Force India’s position.  There was an obligation to provide a minimum of 6,000km to drive the car. That was not conditional on driving on Friday morning Grand Prix sessions or obtaining a licence – that involved additional rights. The terms of the agreement were that Force India would decide on the dates and the driver would participate in driving on those dates to the best of his ability. In fact, the driver had refused to drive at just one particular test date and that would have accounted for 266km of his entitlement. The minimum number of kilometres was therefore reduced by 266km, but otherwise the driver was entitled to damages for the rest of the difference (ie about 3,700km), amounting to compensation of US$1,865,000 at US$500 per km. That’s enough of a refund to drive the formula one company round the bend.

The High Court agreed with the BBC that the duty of confidentiality would have remained on an on-going basis, and this applied not just to Ben Collins’ service company in contract law but also  to Mr Collins in equity. However, it was too late to keep the cat in the bag. Mr Collins’ identity as The Stig had been widely reported in a number of places, so the information was now deemed to have been in the public domain. The Court said the purpose of an interim injunction to protect confidentiality was not merely to punish a defendant for his previous unlawful action but it was to maintain the status quo and protect damage before it was too late. The BBC may, of course, still maintain a right to claim for financial losses arising out of any breach of confidentiality.

If the BBC had been a bit quicker off the mark, there may have been a different result, but it seems that the makers of Top Gear were just not quick enough here. Maybe The Stig himself may have done better if he had been on the BBC’s side in this case?

The High Court had real difficulty. It said that that it was impossible to forecast what the box office takings would have been for a film, especially one that had yet to be finished. It was also impossible to test the claimant’s projections of the likely losses. Projecting the numbers of CDs and DVDs, let alone associated sales such as ringtones and radio income, were just a matter of pure guesswork. However, that should not stop Experience Hendrix from being able to claim any losses, as that would have hit the wrong note entirely. The Court therefore had to find some way of quantifying the losses.

Despite all the speculation over figures, two pieces of evidence enabled the High Court to come up with a figure of lost sales of US$5.8m for the 12 month period following 2010. One piece of evidence was a distribution agreement entered into with a company in 2010 and another was from a rival offer made to the claimant for the DVD and soundtrack rights. The High Court just did the best it could based on those two pieces of evidence. Additional damages would not be awarded as a punishment for flagrant infringement, as The Times had made a genuine attempt to have an appropriate licence.

It is doubtful whether this case or its results would be music to anyone’s ears – whether the fighting parties, judge or even the deceased music star.

R tendered alone for a possible contract, and C clubbed together with another supplier. C went into liquidation and its rights were taken by J. R won the tender. J claimed that R had breached the prohibitions in its agreement with C and that if it had been unable to do what it did, then it would have had to bid with C (now J) and they could have won the bid together. R claimed that the prohibition was an unenforceable restraint of trade and breached Article 101 of the Treaty on the Functioning of the European Union (formerly Article 81 of the EC Treaty).

The High Court ruled that the restriction was unenforceable under EU competition law and granted R summary judgment on the issue. The wide scope of the restrictions and the people affected as well as what was covered by C’s ‘confidential information’ meant that if R had information relating to C or its business practices, finances, dealings and clients received from C, it would breach the contract if any group company made contact with C’s existing or prospective clients. It was very wide in time and unlimited in geography. It went further than could reasonably be required to protect C’s confidential information. This breached Article 101, as it amounted to an agreement that had the object or effect of distorting competition and which could affect trade between Member States of the EU. Since the parties were not operating at a different level of supply – as C was not purchasing or supplying to R but merely assisting clients with obtaining supplies – a possible block exemption for vertical agreements under Article 101(3) did not apply to exempt the arrangement.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments: ‘This case should act as a warning to commercial entities that want to agree non-compete provisions. If they are too wide in scope, they could infringe EU competition law. That in turn could entail large fines, unenforceable agreements and third parties suing for damages.’

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, told the Trusted Reviews web site at www.trustedreviews.com the following:

‘If music is shared without the copyright owner’s permission, the copyright owner has the right to ask people who have distributed or obtained the music without their authorisation for money to cover their losses, costs and expenses. Even if the copyright owner is mistaken about some of the alleged infringement activity, there is nothing to stop them sending the letters. Copyright is different from some other intellectual property in this regard, such as trade marks and patents, where people have to take greater care before making claims.

‘Equally, there is nothing to stop anyone receiving these letters from simply ignoring them. It is up to them what they decide to do, as few, if any, of these sorts of actions have actually reached the courts to date. However, if their case does get to court, any person found to have done wrong may have to pay more, which is why some people simply pay up to take away the worry.

‘As frightening as it may be to receive these letters, especially for people who have done nothing wrong, they do not simply have to pay up. It is for the person making the claim to be able to prove what has happened. A recipient of the letter could deny it and question the evidence alleging the infringement. If the case is contested, recipients of the letter may wonder how likely it would be that the person sending them the letter would be prepared to obtain sufficient evidence and attend a trial, considering the relatively small sums involved in fighting each contested case. To be able to feel confident of winning their case, the claimant would either want to be in possession of a written admission of wrongdoing or the hard drive of the computer. 

‘The implementation of the recently passed Digital Economy Act could make the position more concerning for households. The Act allows for the Government to introduce new laws that would put the onus on people with an Internet connection if it can be shown that copyright infringement had occurred through that connection, regardless of who actually did the infringement. This could affect people sharing a home or people whose Internet connections have been used by cybercriminals. Those new laws have not been introduced yet and would have to undergo Parliamentary scrutiny first, but there could well be pressure to do so if the music industry continues to suffer lost revenues as a result of continued peer-to-peer file-sharing.’

To go to the Trusted Reviews article, click here: http://www.trustedreviews.com/multimedia/news/2010/07/19/Ministry-of-Sound-Gets-Legal-on-Downloaders/p1

The High Court sided with Dominion. Although Dominion was late in paying, that did not give Debenhams an automatic right to end the contract. It all depended on how important timing for payment was. The contract was silent as to whether time was of the essence. In cases like this, courts have to look to whether timing was an essential part of the contract. Sometimes it would be and other times it would not be. On the particular facts of this case, the Court decided that time was not of the essence. Debenhams’ position was not helped by the contract containing a clause which provided for late interest on payments – an indication, thought the Court, that the parties had already agreed an express remedy.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of www.Upload-IT.com, comments: ‘To some extent this case turns on its own facts. However, the key principle is that important terms should be clearly agreed in contracts at the outset. Failure to state whether time is of the essence or not then leads to uncertainty and for courts to impose their own position.

‘Another common mistake that I see people make is to underestimate the importance of the words “time is of the essence” in contracts and not realise the full legal implications of that phrase. It is sometimes assumed that the phrase just means that time is quite important. However, it actually means that even a one minute delay could entitle the other party to terminate the contract and claim damages.’

The Court of Appeal has ruled that the contract was not too vague so as to be enforceable. It was sufficiently certain. Where possible, courts should look to uphold contracts even if not every detail was included. It was also unnecessary to imply a term into the contract providing that the Airline would operate the aircraft in a way that was reasonable in all the circumstances. In deciding whether a breach of contract had occurred, the only question was whether the Airline had in a real and genuine sense been flying its aircraft there. The question as to how many times this happened was entirely a matter for the Airline’s discretion.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments: ‘This case gives a practical reminder that parties to a contract should ensure that their contracts contain sufficient detail. Don’t rely on something to be implied. If the Airport had wanted the Airline to have a certain number of flights a week, it should have said so in the contract.’

The High Court said that the warranty did not apply because no operating documents had been provided by the time of the contract. There was therefore a disconnect between what Red Sky provided in its contracts and its actual processes. Instead of the contractual warranty, implied warranties applied based on the Sale of Goods Act and Supply of Goods and Services Act (notwithstanding that the contract terms had purported to exclude those terms) as no other reasonable warranty applied. The software was not of satisfactory quality or fit for its purpose. In addition, the exclusions and proposed cap on liability did not apply because, in deciding upon reasonableness, the judge took account of the fact that the parties were not of equal bargaining power, the standard terms had sought to exclude the statutory implied terms without providing reasonable replacements, and Kingsway did not know of the existence of the exclusions and limitations on liability. The judge sided with the customer to a large part based on its inability to satisfy itself with the system unless there were clear demonstrations or operating documents.

The High Court ruled that account of profits could sometimes be claimed for breach of confidentiality, but not in this case. It all depended on the circumstances. Duties of confidentiality related to a big range of possible situations. As to whether an account of profits was available as a remedy depended on the particular type of situation and whether it would be just and equitable that the defendant should retain absolutely no profit from that particular type of situation. The nature of a duty of confidentiality could apply in the following big variety of situations:

• Akin to a fiduciary duty.
• Akin to an intellectual property right.
• Arising out of a contractual duty.
• In relation to use of private information obtained from a stranger, and therefore a situation similar to tort.

In this case, there was no fiduciary relationship or intellectual property right type situation and so an account of profits was not appropriate. The relationship was based on a contractual relationship. Therefore, damages was the appropriate remedy rather than V&P having the right to claim an account of profits.

In a welcome ruling for the downtrodden UK media, the High Court decided that what Terry was really concerned about was protecting his sponsorship and endorsement deals rather than his privacy rights. To obtain an injunction in privacy cases, a claimant has to establish that he had a reasonable expectation of privacy, there was no public interest in disclosure and an injunction would be a proportionate remedy. The judge said that it was important to bear in mind the right to freedom of expression under the Human Rights Act, as well as the right to privacy. While respect for private life meant people should live freely according to their own choices, their conduct did not have to be illegal before it could be criticised in public. The freedom to live as you choose is a valuable freedom, but so is the freedom to criticise people’s actions (within the boundaries of the law) for being socially harmful or wrong. Even if Terry’s rights to privacy would prevail, an injunction would not be a necessary remedy, as damages would be sufficient to compensate him for loss of money from his reduced sponsorship contracts.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of www.Upload-IT.com, comments: ‘This case shows just how much of a mess the law of privacy is in this country – although admittedly not quite as much of a mess as the private lives of certain high-profile footballers. Following the recent groundbreaking privacy win for Max Mosley when he was able to claim damages for publication of his sexual exploits and the injunction granted in favour of a married Premier League manager to stop details of his brothel escapades being published, it was thought the British public might never get to read gossip again. As this judgment shows, that’s not necessarily so. However, the dividing line remains unclear and it is creating an enormous headache for the media to know what they can publish and what they can’t. The law of privacy badly needs clarifying.’

The unnamed investor was one of 30 people who had paid deposits for flats at the development but who had then reneged on the deals, preferring to lose their deposits rather than complete their purchases in a falling market. The company is expected to sue a further eight investors and has reached agreements with several others.

With more than 300 similar cases involving other developers reportedly waiting to be heard in London alone – and many more expected to follow – this could well turn out to be a hard lesson for property investors,  some of whom may have been first time individual investors and even buyers who intended to actually live in the property but could not obtain mortgage finance once the value of the property fell.  Some may even face the possibility of bankruptcy.

Despite no doubt being advised by their solicitors (as we do and in writing) of the risks of not completing on an exchanged contract, some buyers do not take on board that it is not just their 10 per cent deposit (or reduced deposit in lieu of 10 per cent) that is at risk if they fail to complete. They are also liable for damages, being any reduction in the sale price of the property in the intervening period, plus marketing and legal costs and expenses the developers incur in remarketing. In a growing market, developers would generally just take the 10 per cent deposit as compensation and resell, but in a falling market they are taking advantage of the fact that they are contractually able to recoup their losses.

This may seem unfair on the buyers, but in the opposite scenario where a plot was worth more on completion that it was on exchange, would buyers be willing to pay a higher price than they contracted to? The situation has to be looked at from more than one angle.