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1) Does the House of Lords bind itself?
The doctrine of binding precedent requires that all courts bind all lower courts and, to some extent, also bind themselves. The latter proposition becomes peculiarly problematic in relation to the House of Lords in its historical position (now, of course, diluted by the possibility of appeals to the judicial institutions of the European Union) as the ultimate appellate court. There exists an inevitable tension between the need for consistency and certainty in the development and application of legal principles and the manifest absurdity of a rigid adherence to precedent producing results which are demonstrably incorrect on the facts of a particular case.
Originally, the House of Lords did not regard itself as bound by its own previous decisions (Bright v Hutton) but this view changed during the course of the 19th century and found ultimate expression in the judgment of Lord Halsbury, LC in London Street Tramways Ltd v London County Council. His Lordship contrasted the “occasional interference with what is perhaps abstract justice” with “the inconvenience – the disastrous inconvenience – of having each question subject to being reargued and the dealings of mankind rendered doubtful by reason of different decisions, so that in truth and in fact there would be no real final court of appeal”. Lord Halsbury argued that there should be finis litium (an end to litigation). However, it has been commented that this thinking may be regarded as confused since it is the principle of res judicata which brings the necessary and desirable end to litigation. This provides the requisite conclusion to individual cases on the basis that “the matter has been decided” and is to be contrasted with the doctrine of binding precedent since the latter provides that certain matters of law are to be applicable in future cases.
It was against this background that the Practice Statement (Judicial Precedent) was issued. The Statement begins by acknowledging that the use of precedent is an “indispensable foundation” since it provides a degree of certainty upon which individuals can rely in the organisation of their affairs and a basis for the orderly development of legal rules. The danger of undermining the basis upon which particular legal arrangements such as contracts were entered into and the particular need for certainty in the criminal law was expressly acknowledged. However, it was recognised that the over-rigid application of precedent could lead to injustice in particular cases as well as restricting the development of the law. Accordingly, the House announced its intention to “depart” from previous decisions where it appeared right to do so. A Press Release issued in conjunction with the Statement made it clear that the power was to be used sparingly perhaps, for example, where there had been “changed conditions”. While appearing to accord with common sense, the Statement is perhaps disingenuous in certain respects: the House clearly wished to maintain the appearance of infallibility – thus there is the significant use of the term “depart” in preference to the more forceful “overrule” and there is no explicit mention of probably the most obvious situation in which the power would be exercised, namely that in which the Judicial Committee took the view that the decision of their predecessors was plainly wrong! To be fair, however, there may be some justification in maintaining the “departure” approach especially where this is as a result of a change of circumstances which are capable of reverting to the status quo ante. An example of this may be found in the decision of the House in Yorke Motors v Edwards where the House “departed from” its earlier decision in Jacobs v Booth’s Distillery on the ground that high interest rates and inflation prevailed at the time but the economy was capable of returning to a state in which the earlier approach had been justified. The leading civil case in this area, Conway v Rimmer is considered at 2) below. In the criminal law, perhaps all the more surprising in the light of the acknowledged “especial need for certainty”, is the remarkable volte face between the decisions of Anderton v Ryan and R v Shivpuri. In the former it was held that the Defendant could not be guilty of the offence of handling stolen goods because the goods were not in fact stolen although she genuinely believed them to be so. The latter decision which followed very shortly thereafter held that the Defendant could be guilty of dealing in a controlled good where he believed he was doing so even though the substance in question was innocuous. The justification appears to stem from the principle that adherence to precedent is necessary in order to enable individuals to make decisions about potentially criminal behaviour and, by definition, no such decision could have been informed by a consideration of Anderton since this would not have affected the defendant’s state of mind. Nonetheless, these and other decisions demonstrate that the House of Lords has continued to regard the power to depart from previous decisions reserved to itself in 1966 as necessary and desirable.
2) Conway v Rimmer
In Duncan v Cammell Laird & Co Ltd, the defendant company built a submarine which foundered during sea trials with the loss of 99 lives. In the ensuing litigation, the widow of one of the perished seamen sought disclosure of certain plans and technical specifications relating to the vessel. The First Lord of the Admiralty objected to their disclosure on the ground of Crown Privilege. The House of Lords held that provided that the relevant minister had reviewed the appropriate documents and arrived at an informed and reasonable decision that the disclosure of all or some of them would be contrary to the public interest, the court should not overrule such a decision and order disclosure.
Against this background, the House of Lords was again required to consider the issue of disclosure of documents in Conway v Rimmer. A torch was found in the locker of a probationary police constable which did not belong to him. The investigating superintendent reviewed the appellant’s probationary reports, informed him that they were adverse and invited him to resign. He refused to do so. He was tried for the theft of the torch and acquitted. Further probationary reports were prepared and the appellant was dismissed. He sued the police officer for malicious prosecution and claimed discovery of the reports. The Home Secretary refused disclosure on the basis of crown privilege. Lord Reid acknowledged that “…if the commonly accepted interpretation of the decision in [Duncan] is to remain authoritative the question admits of only one answer: the Minister’s statement is final and conclusive” but regarded that decision as possessing several abnormal features. First, Viscount Simon had regarded the law in Scotland and England as the same and had incorrectly purported to lay down principles applicable in both countries. Second, subsequent decisions had demonstrated the blanket application of the principle to all classes of public documents to be unsatisfactory. Third – and perhaps most significant – there was a distinction to be drawn on the facts between the disclosure of sensitive military information in a time of war which might be of assistance to an enemy and the revelation of training and progress reports upon a constable in peacetime in which circumstances “it would be grotesque to speak of the interest of the state being put in jeopardy…”. Lord Reid was therefore able elegantly to sidestep the issue of whether there should be a blatant departure from the previous decision.
Lord Morris echoed the wording of the Practice Statement itself in stating:
“Though precedent is an indispensable foundation upon which to decide what is the law, there may be times when a departure from precedent is in the interests of justice and the proper development of the law.”
His Lordship was prepared to embark upon a detailed consideration of authorities prior to Duncan. For example, he cited with approval the statement of Wills J in Beatson v Skeane in which he was “reluctant to…treat it as impossible for circumstances to arise which might justify a judge at the trial in deciding that a particular document of the class under consideration ought to be produced”. Similarly, in Marks v Beyfus, Lord Esher MR was concerned as to whether the DPP could be required in an action for malicious prosecution to answer questions which might reveal the identity of informers (this being the general rule in public prosecutions) and held that it was not a rule “which should never be departed from”. Having reviewed these and similar decisions, Lord Morris concluded that the purpose of doing so was to determine whether there was any foundation for the view that in the face of ministerial objection, the court is always powerless. He opined:
“It seems to me that the decisions in the last century yield no such foundation but that, on the contrary, they tend to show that final decision could [emphasis supplied] rest with the court.”
It was accepted that in the vast majority of cases, there would be no reason to doubt the integrity of the minister and the appropriateness of his decision and that this would usually therefore result in production being refused but that this should not therefore be regarded as inevitable. In addition, a number of the speeches drew attention to the fact that in cases decided since Duncan a considerable amount of disquiet had been expressed at the effect in practice of the interpretation of the principle laid down in that case as leading to the conclusion that a declaration of Crown Immunity should in every case be conclusive. Thus, although it is perfectly possible to regard the departure in Conway as being explicable on the basis of the distinction between the nature of the documents and surrounding circumstances in each case, it is also proper indeed probably appropriate to regard this decision as a reaffirmation by the House of Lords of the principle that a decision of that house should not continue to be regarded as binding where it’s application is wreaking injustice and, in particular, where it appears to have the contrary effect to a well-established line of previous authority.
3) Regalian Properties
a) The Legal Issue
In Regalian Properties plc v London Dockland Development Corp, the plaintiffs entered into negotiations with the defendant corporation for the residential development of former dockland and an offer of £18.5m for a licence to build was accepted “subject [inter alia] to contract”. Over the ensuing years considerable delays were encountered during which time market values fell to the extent that the plaintiffs realised that it would no longer be economic for them to build on the terms previously agreed. Further negotiations failed and the land was never developed. The plaintiffs claimed costs amounting to some £3m in respect of expenses incurred by them in preparation for the intended contract. The court was therefore called upon to determine whether, where parties to a proposed contract had a mutual understanding that there would be a contract between them and, pursuant to that understanding, one party incurred expense which benefited the other party, if the intended contract failed to materialise through no fault of the party incurring expense, that party could recover his wasted costs from the other.
b) The Ratio Decidendi
Rattee J found as fact that the plaintiff incurred the expenditure during a period in which both it and the defendant confidently expected that a building lease would be granted by LDDC to Regalian for the purpose of Regalian’s carrying out the proposed development. He continued:
“However, I also find that each party was throughout this period well aware of the fact that, since Regalian’s bid and LDDC’s acceptance of it had been expressed to be subject to contract, there was no subsisting contract between them and each party was legally free to back out of the arrangement. At no time did Regalian raise the question of reimbursement of its expenditure in the event of the building lease not being granted to it until after the negotiations for such a lease had finally broken down between the parties.”
His Lordship held that the expenditure was not incurred at the request of LDDC save in the sense that it was a necessary prerequisite to obtaining and complying with the terms of the proposed building lease. Further, by the deliberate use of the words “subject to contract” with the admitted intention that they should have the usual effect, the parties had each accepted that if there was no resultant contract, they loss should lie where it fell. The costs incurred were not as a result of the accelerated performance of the anticipated contract but rather in respect of works in preparation for it. The breakdown of negotiations was not as a result of the unilateral decision of either party. Accordingly it was held that where parties entered into negotiations with the intention of including a contract but on express terms that either party was free to withdraw from the negotiations at any time, pending the conclusion of a binding contract, any costs incurred by one of the parties in preparation for the contract would not be recoverable against the other in the event that the contract was not concluded.
c) Lacey v Davis & Marston v Kigass
In William Lacey (Hounslow) Ltd v Davis, the defendant owner of war-damaged premises which he proposed to rebuild led the plaintiffs to believe that they would receive the rebuilding contract. The plaintiffs incurred a considerable amount of expense in preparing the necessary estimates. No formal contract was ever concluded. In the event, the defendant sold the premises and the plaintiffs did not proceed with the work. The plaintiffs claimed breach of an alleged contract (which was rejected) and on a quantum meruit basis for the work done. Barry J (@pp.715-6) acknowledged that the “generally accepted usage” in such situations was that a builder would undertake sometimes very considerable amounts of work in arriving at the price of work for which he has been invited to tender. He distinguished, however, between situations in which the builder’s tender was used “to ascertain the cost of erecting or reconstructing some genuinely contemplated building project” and other circumstances in which it was for some “extraneous or collateral purpose for which the building owner might require it”. In deciding that this was the former situation, His Lordship concluded (@p.720):
“I have, therefore, come to the conclusion that…the court should imply a condition or imply a promise that the defendants should pay a reasonable sum to the plaintiffs for the whole of the services which were rendered to…[the defendant].”
In distinguishing this authority in Regalian, Rattee J concluded that the work carried out was for “the wholly separate purpose of enabling the defendant to negotiate a claim made by the defendant to the War Damage Commission and therefore fell within the definition of “extraneous or collateral purpose”. In commenting upon Lacey, Rattee J (@p.1017) stated that although he did not find the reasoning of Barry J easy to follow, “the result seems to me to make perfectly good sense on the facts of the case”. He nonetheless vigorously contrasted the respective situations in Lacey and Regalian on the basis that whereas in the former it was clear that the builder was undertaking work outside the normal ambit of the estimate process which was clearly intended to benefit the defendant and on a mutual understanding that he would be awarded the contract in due course, there was no such expectation in the latter as was evidenced by the unequivocal use of the words “subject to contract”.
Rattee J was less sympathetic toward the reasoning of the court in Marston Construction Co Ltd v Kigass. That case concerned tenders for the rebuilding of a factory which had burned down. The tendering process was approached by both parties on the basis of an expectation that insurance monies would be forthcoming and that the plaintiff would be paid from the same but it was made clear that no contract would be issued unless and until the insurance monies were paid. The plaintiff once again undertook a considerable amount of preparatory work. Significantly, at one stage, the plaintiff sought an express assurance from the defendant that the plaintiff’s costs incurred before the expected contract was signed would be met by the defendant. No such assurance was given. Judge Peter Bowsher QC sitting as an Official Referee regarded these facts as “similar in kind” to those in Lacey. He allowed the plaintiffs to recover on a quantum meruit basis on the grounds (@pp.157-159) that, notwithstanding “the fact that there was a very clear condition to be met by a third party if the contract was to be made”, there was “an express request made by the defendants to the plaintiffs to carry out a small quantity of design works and that there was an implied request to carry our preparatory works in general and that both the express and the implied requests gave rise to a right of payment of a reasonable sum”. Rattee J found this a “surprising decision” not least because of the fact that an attempt to obtain an express assurance that the preparatory work would be paid for had failed. In this regard it may be inferred that His Lordship would have been inclined to equate the fact that there had been a clear rejection of the attempt to turn an understanding as to preparatory work into a formal contract with the fact that the work in Regalian was expressly “subject to contract”. However, he was again able to distinguish Marston on its facts. In Regalian there were two significant differences: first, it was not anticipated that the preparatory work would have been directly reimbursed from the eventual contract price – the only obligation upon LDDC would have been to grant the anticipated lease; second, His Lordship was “not satisfied in the present case that the preparatory works resulted in any benefit to LDDC”.
d) British Steel v Cleveland
In British Steel Corp v Cleveland Bridge and Engineering Co Ltd, the defendant had successfully tendered for the fabrication of certain steelwork to be used in the construction of a building. To support the fulfilment of this contract, it entered into negotiations with the plaintiff for a sub-contract to supply steel nodes. It was proposed that this be in the defendant’s standard sub-contract in due course but the plaintiff was requested to commence production of the nodes immediately “pending the preparation and issue to you of the standard form of sub-contract”. The order for the supply of the nodes was substantially fulfilled but a formal sub-contract was never entered into because the parties failed to agree on certain terms. The plaintiff sued by way of quantum meruit and, somewhat surprisingly, the defendants counterclaimed on the basis that a contract had come into being and they were entitled to damages under the contract for the late delivery of the nodes. Robert Goff J (@p.511) regarded the situation as straightforward. Both parties confidently expected a contract to be entered into and the request to the plaintiffs to commence work was simply designed to expedite the progress of the contract. If the contract had come into being, the plaintiffs would have been entitled to remuneration thereunder. However, where as here, no such contract came about, “then the performance of the work is not referable to any contract the terms of which can be ascertained, and the law simply imposes an obligation on the party that made the request to pay for such work as had been done pursuant to that request, such an obligation sounding in quasi contract or, as we now say, in restitution.” His Lordship advanced what is, at first sight, an apparently novel proposition, namely that it was “[consistent] with that solution” that a party making such a request might consequently find himself liable to pay for work which he would not have had to pay for as such if the contract had come into existence, for example, preparatory work which will, if the contract is made, ultimately be absorbed in the contract price rather than reimbursed separately. Counsel for Regalian seized on this principle and urged it upon Rattee J in support of the contention that his clients should be reimbursed for their preparatory work. Even to the impartial observer, such an argument appears disingenuous: on any view there must be a clear distinction between work would should properly form the subject matter of the anticipated contract and which is carried out at the specific request of one of the parties prior to the formal formation of the contract in order to expedite completion of the eventual contract and merely preparatory works carried out in the hope and expectation that a contract will eventually be granted especially where, as in Regalian, the subsisting relations between the parties were made expressly “subject to contract”. In any event, there is a clear distinction to be drawn between situations such as those in Lacey, Marston and British Steel where the nature of the work carried out was preparatory to or in expedited performance of work which would ultimately confer a direct benefit upon the other party and the situation in Regalian in which LDDC proposed to grant a building lease in return for a sum of money and the work carried out was preparatory to the work which would then have been continued by Regalian in advancing and completing the building works which would then have conferred a benefit upon the building company when the development was sold on. Rattee J expressly adopted this direct contrast:
“I do not think the judge had in mind (because he was not concerned with such a claim) that a landowner intending to grant a contract for a building lease could find itself liable to pay the intending lessee developer for preparatory work done by the lessee for the purpose of putting itself in a position to obtain and perform the contract.”
e) Does the High Court bind itself?
It was stated at the outset hereof that all courts bind themselves “to some extent”. Lacey was a 1957 decision of the Queen’s Bench Division of the High Court whereas Rattee J in Regalian was sitting in the Chancery Division of the High Court in 1995. Young v Bristol Aeroplane Co Ltd held that the Court of Appeal would be generally bound by its own previous decisions unless there are previous conflicting decisions of its own, it feels bound to follow a House of Lords decision which provides guidance while not expressly overruling the decision of the Court of Appeal or if the decision was per incuriam. This principle will apply in the High Court if it is exercising an appellate jurisdiction (Police Authority for Huddersfield v Watson) but where, as here, the jurisdiction is one of first instance, the principle of self-bindingness will not apply. However, as was demonstrated in Poole Borough Council v B&Q (Retail) Ltd judges will follow previous decisions of the High Court even where they have reservations as to the correctness of doing so in the interests of certainty and “judicial comity”. Accordingly, Rattee J would not have been bound to follow Lacey even had the facts not been indistinguishable.
Mc Leod, I., Legal Method, (4th Ed., 2002)
All England Direct (Lexis/Nexis)
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