Month: October 2010

In an earlier post, I discussed the subrogation claim in Bell Lines v Waterford Multiport Ltd [2006] IEHC 188 (28 April 2006) rvsd [2010] IESC 15 (18 March 2010). My basic point was that subrogation arises for all sorts of reasons. As Lord Diplock put it in Orakpo v Manson Investments [1978] AC 95, followed in this respect by Neuberger LJ in Cheltenham & Gloucester Plc v Appleyard [2004] EWCA Civ 291 (15 March 2004) [32], it “embraces more than a single concept”. Apart from the insurance context where it is largely a matter of contract, several reasons have been proferred to explain when subrogation arises by operation of law.

For example, (i) it can reverse unjust enrichment; (ii) it arises on “well settled established principles and in defined circumstances”; (iii) it will be applied when “reason and justice” demand that it should be; (iv) it reflects the presumed or actual intention of the parties; and (v) it is all simply a matter of discretion. It is unlikely that a single over over-arching theory will explain the whole field. Instead, subrogation is a rather protean doctrine, founded upon many different principles. As a consequence, it is likely that unjust enrichment is simply the theoretical foundation of one facet of the doctrine of subrogation rather than for the whole ambit of the doctrine,. Although, in my earlier post, I argued against too expansive a view of subrogation as founded upon unjust enrichment, I should have clarified that I accept that unjust enrichment does explain important aspects of the doctrine, and I omitted to say that I think that the subrogation claim pleaded by the plaintiffs in Bell Lines is of that nature and ought to have succeeded.

The plaintiffs were compelled by a court decision (Case C-198/98 Everson and Barrass v Secretary of State for Trade and Industry and Bell Lines Limited [1999] EUECJ C-198/98 (16 December 1999)) to pay various sums due in respect of minimum notice, holiday pay, preferential wages, redundancy and pension to the defendant’s employees. This is a classic case of the compulsory discharge of another’s debt (see, eg, Brooks Wharf and Bull Wharf Ltd v Goodman Bros [1937] 1 KB 534; East Cork Foods v O’Dwyer Steel [1978] IR 103). And in Bell Lines at first instance, Dunne J discussed the leading case of Moule v Garrett (1872) LR 7 Ex 100 and held that since the plaintiffs had “[u]ndoubtedly … been compelled by law to pay in their jurisdiction money which the companies were under a liability to pay”, the defendants had an “undoubted liability” to the plaintiffs. Similarly, in McCarthy v McCarthy & Stone Plc [2007] EWCA Civ 664 (04 July 2007), the plc had been compelled by the Revenue to pay taxes for which McCarthy was primarily liable. Following Bernard & Shaw Ltd v Shaw [1951] 2 AER 267, Peter Smith J concluded that McCarthy had no defence to the plc’s claim to recover the amounts of the compelled payments from him, and the Court of Appeal affirmed.

The key question is whether there is, along with this personal recoupment claim (in unjust enrichment), a parallel proprietary subrogation claim (also in unjust enrichment). For example, in Niru Battery Manufacturing Company v Milestone Trading Ltd [2004] EWCA Civ 487 (28 April 2004), the plaintiff successfully established parallel recoupment and subrogation claims. In Appleyard, Neuberger LJ said that “the classic case of subrogation involves a lender who expected to receive security (in the proprietary sense – eg a mortgage) claiming subrogation to another security” ([36]), and in Anfield (UK) Ltd v Bank of Scotland plc [2010] EWHC 2374 (Ch) (24 September 2010) Proudman J held that a “lender who has made advances which have been used to discharge a secured debt owed to another lender may be entitled to step into the shoes of the other lender as far as the security is concerned, thereby gaining priority over intermediate lenders also holding security over the same property” ([9]). This is the basic claim being made by the plaintiffs in Bell Lines. As Proudman J went on to explain in Anfield:

10. It is plain from the authorities cited and authoritatively analysed in Appleyard (and particularly the decision of the House of Lords in Banque Financière de la Cité v Parc (Battersea) Ltd [1999] 1 AC 221, [1998] UKHL 7, [1999] 1 AC 221 (26 February 1998) that the principle underlying such subrogation is equitable in origin and is now recognised as primarily aimed at preventing unjust enrichment.

11. Intermediate lenders are necessarily enriched by the discharge of a prior security. However, in order for the principle to be engaged it is necessary to identify some unconscionable or unjust factor … Filby v Mortgage Express (No 2) Ltd [2004] EWCA (Civ) 759 …

More particularly, the various elements of the principle against unjust enrichment must be satisfied, and in the case of the plaintiffs in Bell Lines, those elements are indeed satisfied: the defendant was enriched when the plaintiffs’ payments to the employees discharged the defendant’s liabilities to the employees; the defendant’s enrichment was plainly at the expense of the plaintiff; the compulsion flowing from the ECJ’s judgment amounted to the unjust factor (as in Niru Battery Manufacturing Company, the compulsion underlying the recoupment claim would satisfy this requirement of an unjust factor); and there is no obvious defence on the facts.

What cases like Niru show is that where the plaintiff’s money is used to discharge the defendant’s debt, the plaintiff has a personal recoupment claim against the defendant; and where the discharged debt was secured, the plaintiff can subrogate to that security. On this basis, there was more to the plaintiff’s subrogation claim than Dunne J gave it credit for when she rejected it.

The photo on the left – ‘Access Denied’ by Simon McGarr – shows the main door of the Four Courts in Dublin, with a sandwich board outside announcing

This entrance is now closed. Please use Morgan Place entrance.

Leaving aside jokes about open justice and access to the courts, I was delighted to note during the week that the board is now gone. According to the Courts Service website:

Four Courts main doors re-opened to the public

The public can once again access the Four Courts via the main entrance on Inns Quay.

The reduced numbers using the Four Courts following the transfer of criminal business to the new Criminal Courts of Justice has made it possible to install a security system at the historic entrance and allow for access by the public.

Brendan Ryan CEO of the Courts Service said that “the main doors once again open for daily business is highly symbolic of the courts being held in public. We are delighted to be in a position to facilitate this and still maintain security and safety for all court users”.

Via the incomparable 9th level Ireland blog, I (rather belatedly) learn that Andrew Croskery, a graduate of Queen’s University Belfast who has taken judicial review proceedings to challenge his degree results (on which I have previously blogged: 1, 2, 3, 4; and there is also an excellent post Jason Smith), might have got a result during the week. According to the BBC, QUB has agreed to review his grade. It seems that he was only 0.5% off obtaining a 2:1 in his degree, and in his judicial review proceedings, he claimed that if he had received better supervision he would have achieved that 2:1. On Tuesday, the High Court granted a three-week adjournment to allow QUB to review his degree classification on the alleged grounds of inadequate supervision and procedural irregularities. QUB told the Court that it made the proposal without prejudice in a bid to ease his concerns. Moreover, the Belfast Telegraph reported that if he is still unhappy with the outcome, he would now be able to appeal his results. As Education Law Blog points out

This appears to be a successful outcome for the student, as the provision of a review is about as much as he could have expected to achieve by way of his legal proceedings. Whether his degree result will actually be improved remains to be seen.

This change of tack on the part of QUB is surprising. According to the the Belfast Telegraph [with added links]:

Queen’s graduate’s courtroom challenge to awarding of 2:2 degree ‘opens a can of worms’

A landmark legal case being taken by a graduate seeking to overturn his degree classification could open up a “can of worms” for all academical institutions, it has been warned. … the University and College Union, which represents more than 120,000 academics and staff across the UK, has said this case could end up setting a “dangerous legal precedent” which could potentially threaten academic freedom.

Professor Bob Osborne, from the University of Ulster’s School of Criminology, Politics and Social Policy, said he was surprised that Queen’s had changed its stance.

I am very surprised that any university is prepared to re-open the classification of a degree after someone has graduated — unless due process has not taken place … If it is confirmed, it does open a huge can of worms. However it may be a defensive position that the university thinks it is better to get rid of the problem rather than having to go before the court. It is unusual unless a student has convinced the university that there has been some malpractice which has led to them being disadvantaged. Maybe they have now uncovered some new evidence.

Jonathan Bell, chairman of the Committee for Employment and Learning, said:

The consequences of any decision in this case are going to be major and I have no doubt that is in the minds of the people as they conduct themselves. There will be a lot of interest to see the outcome. What we at the Employment and Learning Committee will be asking is ‘what can we learn from this? The system has changed a lot culturally since I was at Queen’s in the late 80s when there were no fees and you got a grant. There has been a psychological shift where people are paying for a service therefore they want a good service. And, if there is something legitimate that they think is wrong with the service, they have a right to ask for a review. However I think that courts, in all situations, should be used as a last resort.

I spent the morning at a seminar on Legal Issues for the Third Level Sector hosted by the Arthur Cox Technology & Intellectual Property Group. The morning was chaired by Rob Corbet.

First up were Claire McGrade and Karen Killoran discussing “The Arbitration Act 2010 and Other Forms of Alternative Dispute Resolution”. Claire discussed Alternative Dispute Resolution (ADR) in general, and Karen discussed the (also here). The second full paper was presented by Lisa Kinsella, on “Clinical Research at Third Level: Recent Developments in the Regulatory Framework”. And third was Tara MacMahon, who gave an update on the work implementing the recommendations of the Innovation Taskforce. (more…)

For those who have an interest in the copyright travails of Harry Potter, about which I have blogged previously (1 | 2 | 3), Jeremy Phillips has an interesting blogpost on The 1709 Blog:

Wizard gears up for ten-day tangle with boy magician

Word is now spreading about the news that Scottish author JK Rowling and Bloomsbury Publishing have failed in their bid to prevent an unwanted copyright infringement action getting to court.  A a 10-day Chancery Division trial is now expected, following today’s ruling by Mr Justice Kitchin here that Paul Allen, the trustee of the estate of Willy the Wizard author Adrian Jacobs, has an arguable copyright infringement claim against the author and publisher of Harry Potter and the Goblet of Fire.

JK Rowling and Bloomsbury (her UK publisher) both deny all of the claims and argued that, since they were groundless, they should be dismissed summarily. However, after an interim hearing in July which lasted three days, Kitchin J has now concluded that the claim may succeed and would not therefore be dismissed at this early stage. … more here

The New York Times adds:

British Judge Refuses to Throw Out Suit Accusing Rowling of Plagiarism

J. K. Rowling, the author of the Harry Potter books, still cannot make a years-old plagiarism charge disappear. A lawsuit in a British court accusing Ms. Rowling of partly copying a 1987 book, “The Adventures of Willy the Wizard,” by Adrian Jacobs, may go to trial now that a judge has turned down an application by Ms. Rowling’s lawyers to dismiss the case, according to Reuters.

Mr. Jacobs’s estate has said that Ms. Rowling’s fourth book in the Potter series, “Harry Potter and the Goblet of Fire,” published in 2000, took plot lines from the “Willy the Wizard” book. Ms. Rowling has vehemently denied the accusation, saying that she had not heard of Mr. Jacobs, who died in 1997, until the copyright claim was made in 2004 and had not read his book. A judge overseeing the case in Britain agreed that the assertions by Mr. Jacobs’s estate are “improbable” but refused to dismiss the suit. Ms. Rowling’s American publisher, Scholastic, said it considers the assertions to be “completely without merit.”

More: ABC | Associated Press | Bloomberg | IPKat | Irish Examiner | Matin | MSNBC | PerezHilton | RP-online | Reuters | Sydney Morning Herald | The Bookseller | The 1709 Blog.

Curious Potter fans can check out Willy the Wizard here.

Omar Ha-Redeye has blogged on Slaw about an Ontario CA decision that is very relevant to the judicial review proceedings being taken by Andrew Croskery to challenge his degree results in Queen’s University Belfast (on which I have previously blogged: 1, 2, 3). The gravamen of those posts was that courts are slow to disturb substantive academic decisions, though beyond that sphere, they will of course give effect to claims in tort or for breach of contract. This distinction is at the heart of the case at issue in Omar’s blogpost: Jaffer v York University 2010 ONCA 654 (7 October 2010).

In this case, the plaintiff challenged a decision to exclude him at the end of his first year because he had not maintained a sufficient grade average, on the grounds that the university had failed to make proper accommodation for his Trisomy 21 (Down’s Syndrome) and that he had detrimentally relied on an alleged promise by a professor to defer his status while the dispute over disability was resolved. His claim failed at first instance, in part on the ground that, “[w]hile there may be contractual or tortious issues within the broader claim, if the pith and substance of the impugned conduct is academic in nature, the action cannot be continued in the courts” ([24] Pitt J). This does not seem surprising, since the proposition that the Courts will be slow to interfere in matters of purely academic judgment is well-established as a matter of Canadian law (see, eg, Harelkin v University of Regina 1979 CanLII 18 (SCC), [1979] 2 SCR 561 (30 March 1979); followed in Ontario in Paine v University of Toronto (1982) 34 OR (2d) 770 (Ont CA) and Gauthier v Saint-Germain 2010 ONCA 309 (CanLII) (3 May 2010) ([30]-[31], [46], [50] Rouleau jca, en français)).

On the other hand, in Gauthier, Rouleau jca pointed out that since the relationship between a student and university is, of its nature, contractual, it can give rise to obligations both in contract and in tort ([32]-[33], [46]) and the court does not lack jurisdiction solely because the claim arises out of a dispute of an academic nature ([45]). This, too, is well established in Canadian law (Young v Bella 2006 SCC 3 (CanLII), [2006] 1 SCR 108 (27 January 2006)). As ever, the question is not so much about the line as to the side of it on which any given case might fall.

In the appeal in Jaffer, Karakatsanis JA held that Rouleau jca’s judgment in Gauthier “clarified that the decisions of this court upholding the dismissal of claims relating to academic matters did not do so on the basis that the court lacked jurisdiction …, but rather … because the pleadings did not disclose a reasonable cause of action based upon contract, tort, or negligence or … because the cause of action was untenable in law” ([22]). In other words, the proper judicial deference to academic decisions does not deprive the court of jurisdiction, but it does mean that the plaintiff has no exigible claim.
did not implicate purely academic judgments, so she considered the breach of contract and negligent misrepresenation issues, and found them both wanting.

Hence, the question in Jaffer was not whether the dispute was academic in nature, but rather whether the pleadings support a cause of action in either contract or tort ([31]). Unlike Pitt J at first instance, Karakatsanis JA for the Court of Appeal held that appellant’s various claims did not implicate purely academic judgments, so she considered the breach of contract and negligent misrepresenation issues, and found them both wanting. In other words, the distinction between Pitt J and the Court of Appeal turned on the characterisation of the issues as purely academic or not. Unlike Pitt J, Karakatsanis JA held that the issues were not purely academic, and thus went on to consider whether there was a breach of contract or a tort. She found that there was no basis in the facts pleaded upon which to find that accommodation was an express or implied term of the contract between the university and Jaffer, and thus dismissed the breach of contract claim. She also found that the professor’s offer did not constitute a misrepresentation and that there was no causal link between the allged misrepresentation and the damages claimed, so she also dismissed the misrepresentation claim. However, she did allow the appeal to the extent of permitting Jaffer to amend the Statement of Claim to plead the breach of contract and negligent misrepresentation issues with greater particularity.

On this approach, the question which would arise in Andrew Croskery’s application is whether the matter is one of purely academic judgment. If it is, then the Court will not lack jurisdiction but it will be particularly slow to hold against the university. If it is not, then the court can go on to consider his substantive claims. I await Mr Justice Treacy’s decision with interest.

By means of the doctrine of subrogation, one person is substituted for another in the exercise of that other’s rights against a third person. In particular, it is the process by which one party is substituted for another so that the first party may enforce that other’s rights against a third party. In the classic triangular fact pattern, it arises where a creditor has rights against a debtor, the third party pays the creditor, and is then subrogated to the rights of the creditor against the debtor. In Bell Lines v Waterford Multiport Ltd [2006] IEHC 188 (28 April 2006) rvsd [2010] IESC 15 (18 March 2010), unemployment agencies in the UK paid various entitlements to UK-based employees of an Irish company in liquidation, and successfully sought to be subrogated to those employees’ preferential claims against the company in the Irish liquidation.

The litigation raises, but does not answer, some rather profound questions about the nature of subrogation. In Banque Financière de la Cité v Parc (Battersea) Ltd [1999] 1 AC 221, [1998] UKHL 7 (26 February 1998) and Bofinger v Kingsway [2009] HCA 44 (13 October 2009), the House of Lords and the High Court of Australia took different approaches to the relationship of unjust enrichment and subrogation (see my previous posts). These cases demonstrate that there are several possible approaches to the doctrine of subrogation, and many of them are on show in the judgments in Bell Lines v Waterford Multiport Ltd. However – rather disappointingly – no attempt is made to choose between them (if necessary), or to explain their inter-relationship (if any). Even so, the fact that so many potential principles are invoked in the judgments is intriguing.

The background is the decision of the ECJ in Case C-198/98 Everson and Barrass v Secretary of State for Trade and Industry and Bell Lines Limited [1999] EUECJ C-198/98 (16 December 1999), holding that the company’s UK employees were entitled to claim sums due in respect of minimum notice, holiday pay, preferential wages, redundancy and pension from the Department of Trade and Industry (DTI) and the Northern Ireland Department of Employment and Learning (DEL) (as appropriate). The DTI and the DEL (the Departments) in turn sought preferential status in the Irish liquidation, either on foot of section 285 of the Companies Act, 1963 (also here) or on the basis that they were subrogated to the employee’s preferential claims against the company. The claims failed at first instance ([2006] IEHC 188 (28 April 2006)) before Dunne J, but succeeded in the Supreme Court ([2010] IESC 15 (18 March 2010)). (more…)

Eric Goldman has recently blogged about a US case in which a local tv broadcaster was not held liable in defamation for a comment posted on its website by a viewer. More recently, Rebecca Tushnet discussed a case in which the review website Yelp was held not liable in defamation for hosting a review to which its subject objected (see also CYB3RCRIM3 | Eric Goldman | First Amendment Coalition | Internet Defamation Law Blog | Techdirt ). (Indeed, review authors will usually be able to rely on the defence of fair comment – or honest opinion – anyway). More recently still, Lilian Edwards has blogged about her presentation on internet intermediaries and legal protection. These posts got me thinking about how such disputes might play out as a matter of Irish law.

[After the jump, I discuss the basic position at common law and under the Defamation Act, 2009 (also here), and then I compare and contrast US ‘safe harbor’ defences with EU immunities.] (more…)