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You are here: BAILII >> Databases >> England and Wales High Court (Queen's Bench Division) Decisions >> Strydom v Vendside Ltd [2009] EWHC 2130 (QB) (18 August 2009)
URL: http://www.bailii.org/ew/cases/EWHC/QB/2009/2130.html
Cite as: [2009] EWHC 2130 (QB), [2009] 6 Costs LR 886

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Neutral Citation Number: [2009] EWHC 2130 (QB)
Case No: CC/2009/APP/0272

IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
On Appeal from Nottingham County Court

Royal Courts of Justice
Strand, London, WC2A 2LL
18/08/2009

B e f o r e :

THE HON MR JUSTICE BLAIR
____________________

Between:
BRIAN STRYDOM
Claimant (Appellant)
- and -

VENDSIDE LIMITED
Defendant (Respondent)

____________________

Mr Robert Glancy QC (instructed by Mishcon de Reya) for the Claimant
Mr James H Allen QC and Mr David Rose (instructed by Brooke North LLP)
for the Defendant
Hearing dates: 27 July 2009

____________________

HTML VERSION OF JUDGMENT
____________________

Crown Copyright ©

    Mr Justice Blair :

  1. This is an appeal by the Claimant, Mr. Brian Strydom, from a judgment given by His Honour Judge Inglis in the Nottingham County Court on 6 March 2009 in favour of the Defendant, Vendside Ltd, which is a company carrying on business as claim handlers. It is wholly owned by the Union of Democratic Mineworkers (UDM). The Judge dismissed Mr Strydom's action to recover a payment he had made to the Defendant following the compromise of his claim for an industrial injury called Vibration White Finger (VWF) syndrome (also called Hand-Arm Vibration Syndrome). He says in essence that the money should be repaid because the Defendant was already being compensated for its claim handling services by the Government. In monetary terms, the amount he seeks to recover is very small, £352.50. For that reason, the action was allocated to the fast track. For the same reason, the appeal comes to a single judge of the High Court. However the modest amount at stake belies the fact that the underlying issues are ones of some controversy, and that there are potentially a considerable number of other such claims, which explains the level of legal representation on the appeal and in the court below. There is also the human cost of the illness to the miners concerned. The issues also raise legal questions of some difficulty, and Judge Inglis gave the Claimant permission to appeal.
  2. The Judge's findings of fact

  3. Save in one respect, there is no challenge to the Judge's findings of fact. The Claimant worked as a miner at Thoresby Colliery in Nottinghamshire between 1982 and 1993. He remained a member of the UDM until 1997, and during the course of his membership, the union pursued various claims for personal injury on his behalf. His claim in respect of VWF syndrome arose as follows. In 1998, the High Court approved a Scheme for the compensation of coal miners and former miners who as a result of their work suffered from this disease. By then, the Government had taken on the personal injury liabilities of the British Coal Corporation, which had been the Claimant's employer. There were many potential claims outstanding. Mr Robert Glancy QC for the Claimant told me that there were about 170,000 in relation to VWF amounting some £1.6 billion. When one adds to that the approximately 580,000 potential claimants in respect of chronic obstructive pulmonary disease incurred by people working in the mines, which was subject to its own Scheme set up at the same time, one can see that the amounts involved were very large indeed.
  4. So as to deal with these claims (the vast majority of which were likely to be undisputed) the Government appointed its own claims handlers, a company called IRISC Claims Management, to handle the Scheme. The Government through the Department of Trade & Industry (DTI) also entered into claims handling agreements with service providers on the claimants' side so that the interest of individual miners could be represented. One such claims handling agreement (CHA) was with the defendant company. It is dated 29 January 1999. It provides for a single claims handling fee in respect of VWF syndrome to be paid. This was originally in the sum of £550 plus VAT and from the end of January 2000 in the sum of £500 plus VAT. The fee was increased at a later date to £600 plus VAT. In addition, the Defendant was entitled to receive "reasonably incurred/ previously agreed disbursements".
  5. Under the CHA, the Defendant was responsible for the submission of a letter of claim with details that were derived substantially from the questionnaire filled in by the claimant in question. It also had to consider whether such claimant was within the compensation Scheme at all. A medical report would then be prepared and paid for by the DTI, and usually, when the Scheme became established, arranged by it. Settlement would then be negotiated between the Defendant and IRISC. Cases that could not be settled came out of the Scheme and thereafter would be subject to normal litigation. The Scheme contained clear parameters for both liability and quantum.
  6. In 1998, the Claimant heard of the Scheme, and he got in touch with the union and was referred to the Defendant. On 23 September 1998, he submitted a completed questionnaire and entered into a written agreement. This was a standard form agreement that the Defendant used for this and many thousands of such claims put through the Scheme in subsequent years. Though it predated the CFA by a few months, the Defendant accepted that it handled VWF claims prior to the date of the CFA pursuant to the terms contained in that agreement or terms substantially to the same effect.
  7. The agreement consisted of a form dated 23 September 1998 and headed "VIBRATION WHITE FINGER" on the notepaper of the Union of Democratic Mineworkers, Nottingham Section. The Claimant had to fill it in, and sign it. There were two options to choose from as follows:
  8. 1* Agree that if my Claim is successful I will pay to Vendside Ltd, who administer these Claims, a fee, to cover the cost of pursuing this Claim on my behalf, within the following guidelines:
    Settlement Amount
    Fee Payable
    Up to £500.00 £50.00 + VAT
    £500.01 - £1000.00 £100.00 + VAT
    £1000.01 - £1500.00 £150.00 + VAT

    etc. in increments of £50 + VAT for every £500 recovered, up to a maximum of £300 + VAT on a settlement of £3,000 or more.
    Cheques should be made payable to: 'VENDSIDE LTD' and will be required at settlement of the Claim
    2* I confirm that I am at present a Full Financial member of the UDM Nottingham Section and, therefore, No 1 above does not apply to me. I also confirm that in the event of my leaving the Industry I agree to pay an equivalent sum to the current Union contribution until my Claim is finalised.
  9. As the terms of the form make clear, had the Claimant been a paid up member (a "Full Financial member") of the union, he would have opted for the second choice, and there would have been no fee payable in the event of a successful claim. However, he was not by then a paid up member, and so he opted for the first choice. The effect of the agreement was that if his claim was successful, he would pay a fee to "cover the costs of pursuing this Claim on my behalf" on a sliding scale depending on the settlement amount. In due course, his claim was processed. He was advised to, and did, reject at least one offer that was thought to be insufficient. In June 2000, he accepted an improved offer of £10,545.
  10. By a letter dated 15 June 2000, he authorised the Defendant to accept this sum in settlement of his claim. On the sliding scale, since this settlement exceeded £3000, the maximum amount of £300 plus VAT mentioned in the letter of 23 September 1998 was payable. The letter goes on to state that, "I also understand that as a non-financial member of the UDM I agree to pay £300.00 plus VAT to cover the cost of pursuing this claim on my behalf, as such I attach a cheque to the value of £352.50 in payment of same". In due course, the Claimant received his compensation.
  11. The present action comes to be brought in the following circumstances. In 2004, Mrs. Strydom contacted Mr. John Mann who is MP for Bassetlaw about the £352.50 which had been paid by her husband. Mr. Mann took the cause up on behalf of miners who had brought claims for compensation but who had paid a fee to handlers such as the Defendant, or to firms of solicitors, or others. The controversy that followed was that the claims handlers had already been paid a full and proper fee by the DTI but had taken an additional fee from claimants. Mr. Mann elicited various Parliamentary answers from the Minister. On 3 February 2004, the Minister said that "with regard to the work of claim handling agents we have included in all our publicity material … reference to the fact that there should be no need for any organisations processing claims to charge claimants a fee or deduct any compensation and if any claim handling firms suggest other arrangements claimants should seek advice elsewhere". On 21 June 2004, the Minister answered that, "I am advised that at no time has the department agreed that third parties can charge additional sums". By that time, of course, Mr Strydom had long ago paid his fee. These proceedings were begun by him on 28 January 2005. A large number of similar claims were then intimated or brought. This claim and others were stayed whilst an application was made to the High Court for a Group Litigation Order. That application (in the Judge's words) proved misguided, and was firmly dismissed by Sir Michael Turner on 18 May 2006 (who as a High Court judge had approved the original Scheme). The present action was the restored, and is apparently the first one to come to a hearing.
  12. Against that background, the Judge made a number of specific findings of fact some of which may be material as regards the appeal. The origin of the practice by which people who were paying their membership contributions to the union were dealt with differently from people who were not paying them was as follows. In the 1990's, the UDM's claims handling operation had expanded considerably leading ultimately to the establishment of the Defendant company. In processing claims, the union would incur expense, particularly in respect of disbursements, and ran the risk of being out of pocket in respect of unsuccessful claims. Union members who had paid their subscriptions up to date received representation free. Members who had retired or others who had never been members would have been favoured unfairly if they had the benefit of the union's representation but did not have to make any financial contribution. The fee charged to such persons was "in lieu of membership" and pitched a level approximate to two years membership of the union, or £300, two years being the kind of period that it might be expected to take to pursue a claim.
  13. That system was carried over into representation under the CHA schemes. As the Judge pointed out, the difference in this instance was that the DTI paid a fee for each claim that was successful. The Scheme overall, even taking into account the fact that the Defendant received no payment for unsuccessful cases, was very profitable. The profitability of the business could be seen by the effect on the Defendant company's shareholder funds (represented in the accounts by net cash). The Judge said that they rose from a modest deficit in 1998 to a credit of over £8million by the end of 2006.
  14. The Judge went on to consider the question whether the flat rate fee paid by the DTI in respect of successful cases was sufficient remuneration for work overall. The clear answer, he held, is that it was. He heard evidence from Mr. Michael Stevens, who since 1993 has been General Secretary of the UDM. Mr. Stevens told him that at the outset, it was not clear that the DTI was going to pay enough, or that the volume and nature of the claims would be such as to make handling the claims for the fee paid by the DTI viable. The Judge did not accept that evidence. He found that it was understood from the outset that the fee was going to be such that handlers receiving it were not going to make a loss from their involvement in the Scheme. The fee was pitched at such a level as to amount to adequate remuneration.
  15. The CHA did not preclude in its terms the Defendant from charging a further fee to Claimants. Mr. Stevens maintained that the DTI knew that the trade unions were going to charge a fee to individual successful claimants. In this regard, the Judge held that it was not necessary to resolve the question who knew what, having found that the fee was pitched at such an amount that was expected to make participation in the scheme viable and indeed profitable from the Defendant's point of view. The Judge did however say that, "It appears to me unlikely that it was contemplated by those who negotiated the fee payable to claims handlers that any claims handler would effectively be taking a slice of the compensation as well. If that were to have been regarded as legitimate it would necessarily have affected the amount of the fee agreed and would have been the subject of negotiation. It suffices in my judgement to find as I do that the level of the fee arrived at was such an amount as to be, and to be understood as being, adequate remuneration for the claims handlers' work".
  16. In his first statement of 23 September 2005, the Claimant had said that he was a fully paid up member of the union, and so did not understand why he was charged a fee. As the Judge pointed out, the Claimant was wrong in his recollection in that respect. In a subsequent statement of 6 December 2008, he said that it was not made clear or explained to him that he had the freedom to approach a solicitor as an alternative to using the Defendant. If he had understood this to be the case he would have sought help from an appropriate firm of solicitors without the need to incur a claims handling fee. The Claimant unfortunately is seriously ill, and was unable to attend trial to give evidence. The Defendant submitted that in the absence of evidence that could be tested in cross examination, there was no credible evidence upon which the Court could find in the Claimant's favour in this respect. However the Judge said that there was nothing about the Claimant's state of knowledge in the Defendants' witness statements: "It could not seriously be suggested that the Claimant knew of the funding arrangements between [the Defendant] and the DTI where the [Defendant itself] avoided telling him anything about them, and where there is no evidence to undermine what he says, namely that he found out the facts in 2004. His absence from the witness box is unfortunate but there is no reason at all to think that his account on that crucial issue would be undermined".
  17. Another factual question at trial was what would have happened had the Claimant been told that the Defendant was being paid a handling fee by the DTI and that a contribution from him was not in fact necessary to cover the cost of pursuing the claim on his behalf. If the full facts had been known to the Claimant in 1998, the Judge found that the fee would not have been levied from him, but that if the Defendant had insisted upon it, on balance the Claimant (and no doubt very many other miners) would have gone elsewhere. On the other hand, he did not find that the Defendant knew that others would or might provide the service that it was providing without any charges to the claimant concerned. The Defendant's officers "may or may not have known that but the evidence does not satisfy me that they did know that some solicitors for example charged a fee and some did not".
  18. There is one further factual matter which arises strictly speaking in relation to limitation only, though the Claimant has relied upon it in relation to liability generally. It was held that in contracting to receive the £352.50, the Defendant (through Mr. Stevens and Ms. Walker) deliberately did not disclose that it was to receive payment for its work from another source to cover the cost of pursuing the case: "In my judgment they knew, since it was obvious, that had they revealed the fact people in the position of Mr. Strydom would have questioned it". In making that finding, the Judge rejected the Defendant's submission that the Claimant's evidence from the witness box and testing of it in cross examination would be necessary. The Defendant submits that the evidence did not justify this conclusion, and in this regard only the Judge's findings of fact are challenged on the appeal. I shall deal with this challenge when considering limitation. It is right to express appreciation for the thoroughness of the Judge's findings, reached after a trial that lasted a day only, during which there was a considerable body of evidence and legal submission.
  19. The Claimant's pleaded case

  20. In broad terms, the Claimant's case is that whilst arrangements of the kind set out in the agreement letter of 23 September 1998 may have been justified under earlier conditions prevailing in the union, they were objectionable in the present case because the Defendant was going to get paid by the Government for the service it provided under the terms of the CHA. The Claimant contends that he is entitled in law to recover the sum he paid on three bases: the first is in reliance on a term said to be implied into the contract, the second is in reliance on a concurrent duty in tort (though that has not been pursued in argument), and the third asserts that the bargain entered into by the parties was unconscionable.
  21. The relevant paragraphs of the Amended Particulars of Claim (leaving out amendments) are as follows.
  22. 14. (1) It was an implied term of the said agreement between the Claimant and the Defendant that the Defendant owed the Claimant duties of care as if the Defendant was acting as a solicitor retained by the Claimant, including the duty to act with reasonable care and skill, the duty to give fair, full frank and honest advice to the Claimant, the duty to advise the Claimant of any actual or potential conflict of interest between the Claimant, the Defendant and UDM and the duty not to misrepresent by statement or omission, the Claimant's liability for the cost of pursuing the said claim or the Defendant's entitlement to costs under the pursuant to the said arrangement.
    (2) The Defendant owed the Claimant concurrent duties to those set out in paragraph 2 hereinabove in tort;
    16. In the premises the Claimant will contend that:
    (i) By failing to disclose the fact referred to in paragraph 14 herein above and/or
    (ii) Requiring the Claimant to sign the said agreement and/or to pay the said sum of £352.50 in the belief that he had to do so in order to have his claim handled by and/or to remunerate the Defendant for the cost of pursuing the said claim and/or
    (iii) In failing to advise the Claimant that he could pursue the said claim through a solicitor at no cost whatsoever to himself.
    The Defendant:
    (i) Was in breach of the said implied terms of the said agreement and was negligent;
    (ii) Caused or permitted the Claimant to enter into an unconscionable bargain.

  23. The Defendant made certain admissions as to what was implied into to the contract but otherwise denied the claim. The Claimant places considerable reliance upon these admissions. The relevant paragraph of the Amended Defence is as follows.
  24. 17. In relation to paragraph 14(1) of the Amended Particulars of Claim:
    a. It is admitted that it was an implied term of the contract between the Claimant and the Defendant that the Defendant would, in handling the Claimant's VWF claim, act with reasonable skill and care and give fair, full, frank and honest advice to the Claimant in relation to the merits of his claim and its handling thereof;
    b. It is specifically denied that it was an implied term of the contract between the Claimant and the Defendant that the Defendant would owe to the Claimant the same duties as if the Defendant was acting as a solicitor retained by the Claimant, which it manifestly was not;
    c. It is denied that it was an implied term of the contract between the Claimant and the Defendant that the Defendant would advise the Claimant of any actual or potential conflict of interest whether as alleged or at all;
    d. It is denied that it was an implied term of the contract between the Claimant and the Defendant that the Defendant owed to the Claimant any duty not to misrepresent by statement or omission, the Claimant's liability for the costs of pursuing his said claim or the Defendant's entitlement to costs under and pursuant to its agreement with the DTI.

    In paragraph 24, it is denied that the contract between the Claimant and the Defendant was an unconscionable bargain.

    The parties' cases on appeal

  25. It is evident from the amendments to the Particulars of Claim that a number of the ways in which the Claimant originally sought to put his case have not subsequently been pursued. It is no longer contended that a fiduciary relationship existed between the parties (a point on which the Defendant placed some emphasis during argument). A claim under the Unfair Terms in Consumer Contracts Regulations 1999 is not pursued, nor a claim in undue influence. Also deleted by amendment is a claim that the Defendant falsely and negligently represented to the Claimant that he was obliged to pay the sums in question. In the course of oral argument on the appeal, Mr. Glancy QC also made it clear that he was no longer arguing that the duty owed by the Defendant was the same as that of a solicitor. By the same token, no claim by reference to conflict of interest is pursued. It is no longer alleged that the contract can be impugned on the basis that there was no or no adequate consideration. It is understandable that the claim should have been widely pleaded, because by the time it came to be brought, there were incipient limitation difficulties. In the light of the evidence, the case has been whittled down to what is seen as properly arguable.
  26. I begin with the Claimant's case as to implied term. The Judge began by observing that the case was not put on the basis that there was a misrepresentation that induced the contract. That is right, as was made clear by Mr. Glancy at trial and on the appeal. The Judge referred to the "difficulty of implying a term of the kind contended for by the Claimant which goes far beyond what is necessary for the working of this simple contract. Nor is it possible to read into the terms of that simple contract an obligation on Mr. Strydom to pay the sum stipulated only in the event that it was necessary to pay it to compensate the Defendants for the work that they did. The Defendants undertook to perform work which if it resulted in success would involve the Claimant in payment of a specific sum of money. Nothing could be simpler. I do not think that there is any basis for implying a term requiring disclosure as part of the contractual or other duties of the Defendants, non compliance of which would result in breach of contract or breach of common law duty. What is contended for is quite different from the admitted term of reasonable care and skill in carrying out the contract which is obviously necessary to establish a duty to do the work contracted for adequately".
  27. Mr. Glancy has submitted that in making these observations, the Judge failed to appreciate that the Claimant's case was that the Defendant was under an implied duty not to misrepresent by statement or omission the Claimant's liability for the cost of pursuing the claim. It was wrong he says to regard this as a "simple contract", and in any case the Judge wrongly treated it as a commercial arrangement, whereas the circumstances were unusual if not unique. In those circumstances, the Defendant was under a duty not to misrepresent the situation to the Claimant nor to mislead him explicitly or implicitly into thinking that he had to pay the fee to cover the cost of pursuing the claim on his behalf. The Judge's reference to the admitted term of reasonable care and skill showed (Mr Glancy submitted) a "comprehensive failure to appreciate the Claimant's argument on this point", because the Defendant's admission went substantially further admitting an implied term that the Defendant would "give fair, full, frank and honest advice to the Claimant in relation to…its handling [of his claim]". It is said that if the Judge had approached the issue on the basis of the implied term as admitted by the Defendant, he would have had to find that the advice given to the Claimant was not fair, full, frank or honest. The Claimant also submits that his conclusions on this point are inconsistent with his finding of deliberate concealment in relation to limitation.
  28. Mr James Allen QC for the Defendant submits that the question was whether the implied term pleaded by the Claimant was necessary to give business efficacy to the contract, and the Judge correctly held that it was not. So far as the admission as regards advice is concerned, it is argued that such duty can have come into existence only after the contract itself came into existence. It cannot therefore have been any part of the duty to advise the Claimant that he would have to pay £300 to the Defendant in the event of his claim being successful, since by the time any such duty came into existence, the Claimant was already contractually bound to make the payment. It is said that the Claimant's case relies upon the fallacious contention that a contract may contain an implied term which imposes retrospective duties upon one of the parties. In any case, it is submitted that no advice was given, rather that the Defendant informed the Claimant that if he wished the Defendant to handle his case he would have to pay it that sum.
  29. As regards the case as to unconscionable bargain, the Judge said that the court could only intervene if the Defendant's behaviour was unconscionable, and the outcome was oppressive to the Claimant. He considered that there was nothing in the case which would entitle the Court to give relief outside the parameters of misrepresentation and breach of contract. The Claimant argues that he was wrong not to find that the bargain struck between the Claimant and the Defendant was unconscionable because the Defendant's conduct in extracting from him a promise to pay £352.50 if his claim was successful to cover the costs of pursuing the claim was improper, unfair and exploited the Claimant's lack of knowledge and understanding in a morally culpable manner, and in a way which should shock the conscience of the Court. The Judge should have ordered the rescission of the bargain, and the return of the contractual sum plus interest. The Defendant on this point submits that the Judge decided the issue correctly for the reasons that he gave.
  30. Discussion

  31. The large amounts of money amounts paid to advisers in connection with miners' compensation claims have been a matter of public concern, but Mr Glancy QC did not suggest that this was relevant to the outcome of the appeal. Whatever the underlying considerations may be, to succeed on the appeal, the Claimant has to show that his claim is soundly based in law. In essence, the Claimant says that it is unfair that he should have to pay for the Defendant's claims handling service when the DTI was already paying for it, a fact that was not disclosed to him at the time he entered into the contract, or indeed afterwards. This is not, he points out, a commercial context, but rather one in which a former miner was looking to his union for help. He argues that in these circumstances, the Court should find a way to allow the claim, by implying a term that enables recovery of the amount he paid, or alternatively by setting the contract aside as an unconscionable bargain
  32. The Defendant on the other hand points out that the service it provided to the Claimant would have been provided for nothing had his union dues remained up to date. The reason for making a charge for people like him was so as to treat equally those who were paying their dues, and those who were not, but who nonetheless wanted to use the services of the union to handle a claim on their behalf. Mr. Strydom got what he bargained for. The union successfully pursued his claim, and it would be unfair to allow him to recover back the fee which he agreed to pay in such circumstances.
  33. Since this is an appeal, the Claimant must bring himself within CPR Part 52.11(3), by which the appeal court will allow an appeal where the decision of the lower court was wrong. I have approached this question in accordance with the commentary contained at paragraph 52.11.4 of the White Book.
  34. Implied term

  35. The case is put on the basis of a term said to be implied into the contract between the parties. The implied term which is pleaded is that the "Defendant owed the Claimant duties of care as if the Defendant was acting as a solicitor retained by the Claimant, including the duty to act with reasonable care and skill, the duty to give fair, full frank and honest advice to the Claimant, the duty to advise the Claimant of any actual or potential conflict of interest between the Claimant, the Defendant and UDM and the duty not to misrepresent by statement or omission, the Claimant's liability for the cost of pursuing the said claim or the Defendant's entitlement to costs under and pursuant to the said arrangement". As mentioned, the term contended for has been cut down, in that it is not argued on appeal that the union's duty was the same as that of a solicitor or included a duty to advise as to conflict of interest. Mr Glancy made it clear in his submissions in reply that he was not contending for a duty of disclosure—the case was put on the basis that there was a duty not to mislead as regards costs. His argument was put in two ways, the first being based on admissions in the Defence, and the second being based on the ordinary principles by which a court will imply terms into a contract.
  36. It was admitted in the Defence that "it was an implied term of the contract between the Claimant and the Defendant that the Defendant would, in handling the Claimant's VWF claim, act with reasonable skill and care and give fair, full, frank and honest advice to the Claimant in relation to the merits of his claim and its handling thereof". Mr. Glancy argues that the Judge failed to appreciate that his argument in this respect was not concerned with the "reasonable skill and care" part of this admission, but with that part of the pleading by which the Defendant admitted that it was under a duty to give advice to the Claimant in relation to the handling of his claim.
  37. In substance, this part of the argument turned on the scope of the Defendant's admission. It appears to me that the duty contended for is not within the admitted term as to the giving of advice as to the merits of the claim and its handling. A "duty not to mislead" is given effect to (if it arises) by a claim in misrepresentation, which is not pursued in this case. Further, I do not think that the Judge overlooked the scope of the admission. It is correct, as Mr Glancy points out, that in paragraph 24 of the judgment, the Judge states the admission by reference to reasonable care and skill, without referring expressly to the second part of the admission dealing with advice. But he set out the full admission as it appeared in the Amended Defence earlier in his judgment. He also set out the later passage in the Amended Defence which denied that it was an implied term of the contract that the Defendant owed to the Claimant any duty not to misrepresent by statement or omission the Claimant's liability for the costs of pursuing his claim or the Defendant's entitlement to costs under and pursuant to the CHA, the term the Claimant is arguing for. Thus the Judge was aware that the Defendant was denying the Claimant's case in this respect, and I do not consider that it was within the admission.
  38. The second way the argument is put is that the term contended for is to be implied into the contract on ordinary principles. Mr Glancy refined the pleaded term slightly in oral argument, arguing for a "continuing" duty not to misrepresent by statement or omission the Claimant's liability for the costs of pursuing his claim or the Defendant's entitlement to costs under and pursuant to the CHA. (This was intended to deal with the Defendant's submission that a term cannot be implied into a contract which imposes retrospective duties upon one of the parties.) There were no detailed submissions by either party of the appropriate test for implication of terms (c.f. the recent decision of the Privy Council in Attorney General of Belize v Belize Telecom Ltd [2009] UKPC 11 ). The appeal proceeded on the basis that the test for implying a term is necessity, reliance being placed on The Moorcock (1889) 14 P.D. 64, and in particular the classic statement of Bowen LJ at 68: "In business transactions such as this, what the law desires to effect by the implication is to give such business efficacy to the transaction as must have been intended at all events by both parties who are business men".
  39. That case establishes that a term is to be implied into a contract because it is necessary, in the business sense, to give efficacy to the contract. Having accepted that this is the correct test in law, Mr. Glancy submitted however that the present situation was a unique one, and that the approach that would be taken to a commercial contract should not be applied here. He says that it is necessary to imply the term into this contract because "otherwise one has the situation where the Defendant company is enabled to earn enormous sums from the public, and at the same time to charge retired miners what for them is a significant sum, and one which the Government is already paying".
  40. It is certainly true that each contract is different, and that this contract was not the type of complex commercial arrangement that features in some of the case law. It is also true that the background has some features which are probably unique. But that does not mean that the question of implication is in the court's discretion, or that the court has power to introduce terms to make the contract fairer or more reasonable. As noted, the Claimant does not suggest that he is entitled to rescind the contract on the basis of a misrepresentation as to fees. Nor does he rely on a freestanding duty of disclosure. Nor is it suggested that the relationship between the parties was a fiduciary one. The question the Judge was asked to decide was whether the asserted term was necessary to give it efficacy. He took the view, correctly in my opinion, that it went far beyond what was necessary in what was, in essence, a simple contractual arrangement. Putting the question in a different way, I do not consider that the letter of 23 September 1998, read as a whole against the relevant background, would reasonably be understood to include the term contended for. The legal threshold for the implication of terms is not satisfied, and in my view, the Judge was right so to hold. Mr. Glancy did not suggest in either written or oral argument that a different result would follow in tort, and I need say nothing more about the position in tort.
  41. Unconscionable bargain

  42. As regards unconscionable bargains, the Claimant submits that on the Judge's findings of fact, there has been impropriety and unfairness in the bargaining process and that such impropriety is to be found in the conduct of the stronger party. The fact that this case is different from earlier authority, it is submitted, does not mean that equity cannot intervene. Equity will intervene in any case where there has been unconscionable behaviour. The Defendant for its part submits that the Judge rightly held that the contract was not an unconscionable bargain as that term is understood in the law.
  43. The Judge directed himself on this issue by applying the well known dictum of Mr. Peter Millett QC (as then was) in Alec Lobb Ltd v Total Oil (GB) Ltd [1983] 1 WLR 87 (reversed in part at [1985] 1 WLR 173). On the basis of the case law, it was held at pages 94-95 that three elements must be present before the court will interfere with a contract on this basis:
  44. "First, one party has been at a serious disadvantage to the other, whether through poverty, or ignorance, or lack of advice, or otherwise, so that circumstances existed of which unfair advantage could be taken: see, for example, Blomley v. Ryan (1954) 99 C.L.R.362, where, to the knowledge of one party, the other was by reason of his intoxication in no condition to negotiate intelligently; secondly, this weakness of the one party has been exploited by the other in some morally culpable manner: see, for example, Clark v. Malpas (1862) 4 De G.F.& J.401, where a poor and illiterate man was induced to enter into a transaction of an unusual nature, without proper independent advice, and in great haste; and thirdly, the resulting transaction has been, not merely hard or improvident, but overreaching and oppressive. Where there has been a sale at an undervalue, the under-value has almost always been substantial, so that it calls for an explanation, and is in itself indicative of the presence of some fraud, undue influence, or other such feature. In short, there must, in my judgment, be some impropriety, both in the conduct of the stronger party and in the terms of the transaction itself (though the former may often be inferred from the latter in the absence of an innocent explanation) which in the traditional phrase "shocks the conscience of the court," and makes it against equity and good conscience of the stronger party to retain the benefit of a transaction he has unfairly obtained."
  45. In summary, therefore, before the court will consider setting a contract aside as an unconscionable bargain, one party has to have been disadvantaged in some relevant way as regards the other party, that other party must have exploited that disadvantage in some morally culpable manner, and the resulting transaction must be overreaching and oppressive. No single one of these factors is sufficient—all three elements must be proved, otherwise the enforceability of contracts is undermined (see the reasoning in Goff & Jones, The Law of Restitution, 7th edn, para 12-006). Where all these requirements are met, the burden then passes to the other party to satisfy the court that the transaction was fair, just and reasonable (Snell's Equity, 31st edn, para 8-47).
  46. As to the first requirement, the Judge accepted that there was inequality of bargaining power between a former miner looking for advice and trusting the union to look out for his interests, and the union offering to pursue the miner's claim on its own terms and for its own benefit. (I think that this must be treated as a finding on the particular facts, because the concept of "inequality of bargaining power" will normally have no place in the relationship between a union and its members.) But, he held, it was essential that the outcome was oppressive to the Claimant, and that in addition the Defendant must have acted unconscionably. As to unconscionable behaviour, he said: "Neither the consequences of the contract nor the conduct of the Defendant's, even if regarded as reprehensible, qualifies for that sort of relief. To turn failure to disclose into conduct which will allow the Court to intervene in equity in my judgment is to take the powers of the Court too far …". The Claimant has submitted that this passage shows that the Judge found that the Defendant's conduct was reprehensible. In my view however the Defendant is correct to submit that it is implicit from this passage of his judgment that he did not make such a finding.
  47. To support his argument, Mr. Glancy QC referred to Cave v Robinson Jarvis & Rolf [2003] 1 AC 384. This was a case about deliberate concealment for the purposes of s. 32(1)(b) Limitation Act 1980. It had been submitted that some degree of unconscionability in the conduct of the defendant is necessary before this provision can deprive a defendant of a limitation defence. At [64], Lord Scott said that, "This was, I think, based mainly on Lord Browne-Wilkinson's comment in Sheldon v R H M Outhwaite (Underwriting Agencies) Ltd [1996] AC 102, 145h that 'unconscionable behaviour by deliberately concealing the facts relevant to the plaintiffs' cause of action' was 'the underlying rationale' of section 32". Lord Scott continued at [65], "I respectfully agree that it is difficult to think of a case of deliberate concealment for s. 32(1)(b) purposes that would not involve unconscionable behaviour…". Mr. Glancy has sought to invoke this passage to show that the Judge's finding that this case falls within s. 32(1)(b) Limitation Act 1980 necessarily involved a finding that there has been unconscionable behaviour by the Defendant in this case. But the argument loses force when one appreciates that Lord Scott went on to hold that the "statutory language does not require that the behaviour of the defendant is unconscionable and its addition as a criterion to be satisfied before a case can be brought within section 32 is, in my opinion, unnecessary and unjustified". In the event, Judge Inglis did not make such a finding.
  48. Furthermore, I think that he was right so far as he held that the third element identified in Lobb, namely that the transaction was oppressive, was not shown on the facts of this case. As Chitty on Contracts, 30th edn, at paras 7-129 and 7-130 makes clear, before it will be treated as an unconscionable bargain, a contract must be oppressive to the complainant in its overall terms. The question is whether the contract was oppressive, not whether it was unreasonable—this appears, for example, from Multiservice Bookbinding Ltd v. Marden [1979] Ch 84 in which Browne-Wilkinson J said at p. 110, "…it is not enough to show that, in the eyes of the court, [the bargain] was unreasonable". The question must, I think, be determined on the facts as they are at the time the contract is entered into, and from the perspective of the disadvantaged contracting party. Whilst I have considerable sympathy with the Claimant's submissions, persuasively put by Mr Glancy QC, the fact is that he had to pay a fee because he was seeking union representation and was no longer paying his union dues, the fee was payable only in the event of a successful settlement, and it was capped at £300. It is correct that the union was also to receive a fee from the DTI, and that this activity turned out to be very profitable given the number of claims that were handled. But legitimate public concern on this ground does not render the contract "oppressive" in the legal sense as regards the Claimant. The issue whether or not the DTI might have had a cause of action does not arise in this litigation. Applying the above principles, I consider that the appeal on this point also fails.
  49. Limitation

  50. In view of my findings on the Claimant's appeal, it is not strictly necessary to deal with the limitation issue, which was decided in favour of the Claimant. By a Respondent's notice, the Defendant asserts that there was no evidence upon which to find that the Defendant deliberately did not disclose that it was to receive payments from another source. On that basis, it is submitted that the Judge was wrong to hold, as he did, that the claim in contract was not time barred by virtue of s.31(1)(b) Limitation Act 1980. This section provides that where any fact relevant to the plaintiff's right of action has been deliberately concealed from him by the defendant, the period of limitation shall not begin to run until the plaintiff has discovered the concealment, or could with reasonable diligence have discovered it. So, it is submitted, the Judge was wrong to decide that time did not begin to run until 2004 when (as he held) the Claimant found out about the DTI payments.
  51. The Defendant cites the discussion in Williams v. Fanshaw Porter & Hazelhurst [2004] 2 All ER 616 (CA) at [14] of the requirement that the fact relevant to the right of action must be "deliberately concealed". In that passage, Park J said that "for concealment to be deliberate, the defendant must have considered whether to inform the claimant of the fact and decided not to. I would go further and accept that the fact which he decides not to disclose either must be one which it was his duty to disclose, or must at least be one which he would ordinarily have disclosed in the normal course of his relationship with the claimant, but in the case of which he consciously decided to depart from what he would normally have done and to keep quiet about it". The argument boils down to whether the Judge was entitled to find on the evidence that Mr. Stevens and Ms. Walker deliberately did not disclose that they were to receive payment for their work from another source to cover the cost of pursuing the Claimant's case. The Judge held that they knew, since it was obvious, that had they revealed the fact people in the position of the Claimant would have questioned it. The Defendant says that none of its witnesses was cross-examined upon this point at the trial. The Defendant also complains that the Judge rejected its submission that in order to make these findings, the Defendant ought to have had the opportunity to test the Claimant's evidence in cross-examination.
  52. I reject the Defendant's submission so far as the Claimant's own evidence was concerned. He was seriously ill, and the Judge was entitled both to receive, and give appropriate weight to, his evidence, albeit it was not tested in cross examination. I have found more difficultly as regards the evidence of the Defendant's witnesses. It is axiomatic that a claimant who wishes to rely on s.32(1) Limitation Act 1980 whether in relation to fraud, concealment or mistake, must fairly put the facts relied upon to the defendant's factual witnesses. Where, as here, the Claimant argued that facts relevant to his right of action had been deliberately concealed from him by the Defendant, this allegation had to be put to those witnesses called by the Defendant whose behaviour was being called into account. Mr. Glancy took me through his cross-examination of the Defendant's witnesses to demonstrate that this was done. The allegation of deliberate concealment was not put, so far as I can see, in terms to the witnesses, but it was put that they had been misleading the Claimant, on the basis that he thought that he had to pay to get his compensation, whereas the costs were being paid by the DTI. Mr. Stevens was asked why that was not explained to him, and answered that it was not something that was hidden, and that claimants knew exactly what was happening. His evidence in this respect was rejected by the Judge. It appears to me that the allegation that the Claimant had been misled adequately put his case in relation to deliberate concealment, and I reject the Defendant's complaint in this respect. In my view, the Judge was entitled to make the findings he did on the evidence.
  53. I consider that the limitation question was decided correctly in favour of the Claimant, but this does not affect the outcome. For the reasons set out above, this appeal is dismissed.


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URL: http://www.bailii.org/ew/cases/EWHC/QB/2009/2130.html