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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Hudson v Solicitors Regulation Authority (SRA) [2017] EWHC 1249 (Ch) (23 May 2017) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2017/1249.html Cite as: [2017] EWHC 1249 (Ch) |
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CHANCERY DIVISION
Rolls Building, 7 Rolls Buildings Fetter Lane, London EC4A 1NL |
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B e f o r e :
____________________
ALEXIS MAITLAND HUDSON |
Claimant |
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- and - |
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SOLICITORS REGULATION AUTHORITY |
Defendant |
____________________
Edward Levey (instructed by Bevan Brittan LLP) for the Defendant
Hearing dates: 3rd April 2017
____________________
Crown Copyright ©
CHIEF MASTER MARSH :
The Claim
(1) it amounted to a wrongful interference with the Firm's goods within a meaning of section 1 of the Torts (Interference with Goods) Act 1977 (the claim in conversion).
(2) The SRA breached an equitable duty owed to Mr Maitland Hudson and the Firm not to allow anyone other than Mr Maitland Hudson and the Firm to have access to the confidential information save in furtherance of the SRA's investigative objectives.
(3) The SRA was in breach of a tortious duty to take reasonable care to preserve the confidentiality of the confidential information.
"13. Discovery by [Mr Maitland Hudson] and [the Firm] that [Mr Dempsey] had obtained possession of the drives and the documents from the SRA caused them to make an interim application for delivery up, which application was successful ("the Application"). The Application would not have been required if the SRA had not acted in breach of duty as alleged herein.
14. As a result [Mr Maitland Hudson] seeks the unrecovered costs of the Application plus interest at such rate and for such period as the court may order."
The Dempsey Claim
(1) That Mr Dempsey's opposition to the application for interim relief was wrong-headed and unreasonable.
(2) The claimants were unsuccessful in obtaining an order that Mr Dempsey should pay their costs (save in relation to the costs of the first hearing) before Warren J.
(3) Mr Dempsey vigorously opposed the application for return of the Documents but then capitulated half way through the hearing.
(4) The parties agreed on 6th May 2015, despite the order of Mann J that the costs of the application were reserved to the trial judge, to settle the claim on the basis that there should be further hearing for the determination of the costs issues.
The SRA's application
"Interim application for delivery up, which application was successful."
The SRA's case
i) If Mr Dempsey had provided the undertakings requested on 23 April 2014, or delivered up the materials when asked to do so, the claimant would not have needed to make the Application and the costs would not have been incurred.
ii) Mr Dempsey's conduct in withholding the materials from Mr Maitland Hudson was wholly unreasonable. He persisted in a course of action, notwithstanding the observations made by Warren J at the first hearing, right through to a substantive hearing before Mann J.
iii) The SRA was not in any way responsible for Mr Dempsey's conduct.
Mr Maitland Hudson's case
The Law
"whether the wrongful conduct causally contributed to the loss and, if it did, what is the extent of the loss for which the defendant ought to be held liable."
He describes the first of these enquiries as predominantly a factual enquiry and goes onto say at [70]:
"The second enquiry, although this not always acknowledged by the courts, involves a value judgment ("ought to be held liable"). Written large, the second enquiry concerns the extent of the loss for which the defendant ought fairly or reasonably or justly to be held liable (the epithets are interchangeable)."
"Baron Cleasby's aphorism, uttered in 1872 in Fowler v Hollins LR 7 QB 616, 639, still represents the law: "persons deal with property in chattels or exercise acts of ownership over them at their peril." This, he observed, was regarded as a salutary rule for the protection of property."
At paragraph [92] under the heading "Intervening acts, and the costs of recovery and repair" he says:
"The loss flowing from unforeseen circumstances should be borne by the wrongdoer not the innocent owner of the goods. Additionally, provided the amount is not out of proportion to the value of the goods, the wrongdoer ought to reimburse the owner for any money spent on recovering the goods or carrying out necessary repairs."
"By consequential loss I mean loss beyond that represented by the value of the goods."
However, it is apparent from what has gone before that this is intended to be a short hand and the costs of recovery of a chattel fall within loss represented by the value of the goods, hence Lord Nicholls remark at [92] that the costs of recovery must not be out of proportion to the value of the goods.
"In the case of conversion, the causal requirements follow from the nature of the tort. The tort exists to protect proprietary or possessory rights in property; it is committed by an act inconsistent with those rights and it is a tort of strict liability.
…
The liability is strict. Thus the causal questions are answered by reference to the nature of the liability."
"When one comes to consequential loss, the causal requirements are different. The primary purpose of conversion is to protect the proprietary or possessory interest in the chattel. Thus the cost of putting the aircraft into repair or paying a ransom for their recovery from Iran of the damage or expenditure incurred in mitigation of the damage to the proprietary interest. When comes to real consequential losses, such as the cost of hiring substitute aircraft, the cost of financing the purchase of new ones and loss of profit, there is no reason why causal requirements which are considered fair in other cases of consequential loss flowing from wrongful acts should not also be applied."
"Expressed in terms of the traditional guideline principles, the choice is between confining liability for consequential loss to damage which is "foreseeable", as distinct from damage flowing "directly and naturally" from the wrongful conduct. In practice, these two tests usually yield the same result. Where they do not, the foreseeability test is likely to be more restrictive."
Breach of the equitable duty of confidence
"A more problematical question has the been the availability of damages in the situation instanced by Megarry VC where there is no case for the grant of an injunction. …It is suggested that, quite apart from Lord Cairn's Act, compensation in equity (also known as equitable damages) may be awarded generally for breach of an equitable duty of confidence, just as for breach of duty by fiduciary; and that the same compensatory principles underlie compensation or damages in equity as underlie damages at common law. Despite past doubts, it is now accepted that damages are available for breach of duty of confidence, whether in contract or in equity."
[The footnote refers to the decision in Royal Bank of Brunei v Tan [1995] 2 AC 378 and to the discussion by the Supreme Court of Canada in Cadbury Schweppes Inc v FBI Foods Limited [1999] 167 DLR (4th) 577, at paras 55-61].
"In summary, compensation is an equitable monetary remedy which is available when the equitable remedies of restitution and account are not appropriate. By analogy with restitution, it attempts to restore to the plaintiff what has been lost as a result of the breach, ie the plaintiff's loss of opportunity. The plaintiff's actual loss is a consequence of the breach is to be assessed with the full benefit of hindsight. Foreseeability is not a concern in assessing compensation, but it is essential that the losses made good are only those which, on a common sense view of causation, were caused by the breach."
The duty in tort to take reasonable care to preserve confidentiality
"Although the foreseeability test is a handmaiden of the law, it is by no means a maid of all work. To my mind, it cannot serve as the true criterion when the question is, how was the damage caused? ".
"These authorities suggest that, once liability is established, any question of the remoteness of damage is to be approached along the following lines which may, of course, be open to refinement and development. (1) The starting point is that a defender is not liable for a consequence of a kind which is not reasonably foreseeable [authorities omitted] (2) While a defender is not liable for damage that was not reasonably foreseeable, it does not follow that he is liable for all damage that was reasonably foreseeable: depending on the circumstances, the defender may not be liable for damage caused by a novus actus interveniens or unreasonable conduct on the part of the pursuer, even if it was reasonably foreseeable: McKew v Holland & Hannen & Cubitts (Scotland) Limited 1970 SC (HL) 20, 25, per Lord Reid: Lamb v Camden London Borough Council [1981] QB 625; but see Ward v Cannock Chase District Council [1986] Ch 546. (3) Subject to the qualification in (2), if the pursuers injury is of a kind that was foreseeable, the defender is liable, even if the damage is greater in extent than was foreseeable or was caused in a way that could not have been foreseen: Hughes v Lord Advocate [1963] AC 837, 847, per Lord Reid…."
"(i) Some natural event independent of any human agency;
(ii) An act (or omission) by a third party;
(iii) The conduct of the claimant himself."
"The rationale of the principle that a novus actus interveniens breaks the chain of causation is fairness".
A similar approach can be seen in Aikens LJ in Chubb Fire Limited v Vicar of Spalding [2010] EWCA Civ 981 at [64] where he said:
"…the ultimate question is: What is the extent of the loss for which the defendant ought fairly, or reasonably or justly to be held liable".
"These examples show that one cannot give a common sense answer to a question of causation for the purpose of attributing responsibility under some rule without knowing the purpose and scope of the rule. Does the rule impose a duty which requires one to guard against, or makes one responsible for, the deliberate acts of third persons? If so, it will be correct to say, when loss is caused by the act of such a third person, that it was caused by the breach of duty…before answering questions about causation. It is therefore first necessary to identify the scope of the relevant rule."
"Did the intervening act "isolate", or "insulate" or "eclipse" the defendant's conduct so that it was merely the occasion of the harm rather than the cause of it."
"No mere conduit pipe through which consequences flow from [defendant to claimant], no mere part of a transmission gear set in motion by the [defendant]."
"…where human action forms one of the links between the original wrongdoing of the defendant and the loss suffered by the plaintiff, that action must at least have been something very likely to happen if it is not to be regarded as novus actus interveniens breaking the chain of causation. I do not think that a mere foreseeable possibility is or should be sufficient, for then the intervening human action can more properly be regarded as a new cause than as a consequence of the original wrongdoing. But if the intervening action was likely to happen I do not think that it can matter whether the action was innocent or tortious or criminal."
"No precise or consistent test can be offered to define when the intervening conduct of a third party will constitute a novus actus interveniens sufficient to relieve the defendant of liability for his original wrongdoing. The question of the effect of a novus actus can only be answered on a consideration of all the circumstances and, in particular, the quality of that later act or event. (per Lord Simonds in Hogan v Bentinck West Hartley Collieries (Owners) Ltd [1949] 1 All ER 588 at 593). Four issues need to be addressed. Was the intervening conduct of the third party such as to render the original wrongdoing merely part of the history of events? Was the third party's conduct either deliberate or wholly unreasonable? Was the intervention foreseeable? Is the conduct of the third party wholly independent of the defendant, i.e. does the defendant owe the claimant any responsibility for the conduct of that intervening third party? In practice in most cases of novus actus more than one of the above issues will have to be considered together." [my emphasis]
Applying the law to the facts
Conclusion