Saving the Environment: The Prospect of Electric Aircraft

The electric car, once only the domain of eccentric Sci-Fi movies, has now well and truly found its way into everyday consumer life. So, what’s next for the world of fuel innovation? Will we really be able to power commercial flights using just electric fuel, as we now can cars? A start-up company formed just last year believes we will. The goal of Wright Electric is to make every short-hau…

4KBW Electric flights

The electric car, once only the domain of eccentric Sci-Fi movies, has now well and truly found its way into everyday consumer life. So, what’s next for the world of fuel innovation? Will we really be able to power commercial flights using just electric fuel, as we now can cars?

A start-up company formed just last year believes we will. The goal of Wright Electric is to make every short-haul commercial flight electric-powered in the next twenty years. Perhaps even more ambitious is their hope to offer a commercial flight between London and Paris in the next ten years.

The company’s proposed low-emission electric plane would actually cost less to run than those currently operating on jet fuels, resulting in a lower cost of travel for both airlines and consumers. The planes would have modular battery packs that could be charged independently of the plane, allowing for a quick swap-over on the tarmac whenever a plane needs ‘refuelling’. This would use the same cargo container that is already in a regular plane. The company is currently seeking investors to help them build a 150-seat passenger aircraft capable of flying 300 miles, which would compete with the smaller members of the Airbus A320 and Boeing 737 families. That means that, by 2030, your trip across the continent could be entirely electric-fueled.

The only problem is that the battery technology that the company is relying on doesn’t actually exist – yet. Wright Electric is relying on battery innovation to continue at its present rate for the next ten years in order for the company to keep a plane in the sky on electricity alone for an entire flight. Batteries need to shrink in both weight and volume, to about 25 tons per battery, in order to make their plans take off. If this doesn’t happen, then Wright Electric would be forced to switch to a hybrid of regular aviation fuel and electricity to power their planes.

Despite this, the project seems to have enough promise in it that major carrier EasyJet has gotten involved. The budget airline has entered into discussions with Wright Electric to share their commercial know-how with the start-up and increase their chances of success. Although Wright Electric hasn’t yet produced a plane of its own, they’re also working alongside American inventor Chip Yates, who has created his own small electric aircraft, the Long-ESA.

But even if Wright Electric is unable to complete the feat, they’re certainly not short of competitors. Aviation giant Airbus is also developing its own electric models. The first of these, a two-seater plane, the E-Fan, has been under development since 2014. In 2015, Airbus completed its first successful electric flight across the English Channel in this model, piloted by Didier Esteyne, who called the flight “confirmation that we can proceed with the development of these aircraft”. And, despite starting small, the company have also announced plans to create their own short-haul electric aeroplane seating 70 to 90 passengers in the future.

This means that it shouldn’t be too long before Airbus is producing larger, commercial-sized jets, powered by electricity alone.

What is needed to push these innovations further is competition, which seems to be well and truly present – so perhaps the reality of Sci-Fi electric planes isn’t too far off the horizon now.

BIRD STRIKES RULED AS “EXTRAORDINARY CIRCUMSTANCES” BY THE EUROPEAN COURT OF JUSTICE

A collision between an aircraft and a bird may now be defined as an ‘extraordinary circumstance’, according to the Court of Justice for the European Union (“the Court”) in a judgment delivered on 4 May 2017.

The ruling means that any collision with birds may exempt an air carrier from the need to pay compensation under Regulation (EC) No.261/2004 (“the Regulation”) to passengers in respect of flight cancellations or delays of over three hours.

The case concerned Ms Marcela Pešková and Mr Jirí Pešká, who encountered a long delay to their flight from Burgas (Bulgaria) to Ostrava (Czech Republic) in August 2013 with the Czech airline Travel Service. The aircraft set to complete their trip had already flown from Prague to Burgas, Burgas to Brno and from Brno to Burgas before commencing their journey.

A collision between an aircraft and a bird may now be defined as an ‘extraordinary circumstance’, according to the Court of Justice for the European Union (“the Court”) in a judgment delivered on 4 May 2017.

The ruling means that any collision with birds may exempt an air carrier from the need to pay compensation under Regulation (EC) No.261/2004 (“the Regulation”) to passengers in respect of flight cancellations or delays of over three hours.

The case concerned Ms Marcela Pešková and Mr Jirí Pešká, who encountered a long delay to their flight from Burgas (Bulgaria) to Ostrava (Czech Republic) in August 2013 with the Czech airline Travel Service. The aircraft set to complete their trip had already flown from Prague to Burgas, Burgas to Brno and from Brno to Burgas before commencing their journey. During the flight from Prague to Burgas (the first sector), it exhibited a technical failure in a valve. The valve was repaired but this led to a delay of 1 hour and 45 minutes. When the aircraft then flew from Burgas to Brno (the second sector), it collided with a bird during landing necessitating mandatory safety checks at Brno. Its condition was checked first by a local company and then by a Travel Service technician as the owner of the aircraft, Sunwing, refused to authorise the first check.

The aircraft passed both safety checks but this resulted in a total delay of 5 hours and 20 minutes to Ms Pešková’s and Mr Pešká’s flight to Ostrava. They then brought an action against Travel Service under the Regulaiton in the Prague 6 District Court for CZK 6,825 (approximately €250 each) in compensation.

The Czech court referred several questions to the Court, including whether the collision of an aircraft with a bird is an “extraordinary circumstance” within the meaning of Article 5(3) of the Regulation.

The Third Chamber held that extraordinary circumstances within the meaning of the Regulation are events which, by their nature or origin, are not inherent in the normal exercise of the activity of the air carrier and are outside its actual control. At paragraph 24 of the judgment, the Court explained its reasoning thus:

‘In the present case, a collision between an aircraft and a bird, as well as any damage caused by that collision, since they are not intrinsically linked to the operating system of the aircraft, are not by their nature or origin inherent in the normal exercise of the activity of the air carrier concerned and are outside its actual control. Accordingly, that collision must be classified as ‘extraordinary circumstances’ within the meaning of Article 5(3) of Regulation No 261/2004.’

The Court’s definition on inherency – whether an event is ‘intrinsically linked to the operating system of the aircraft’ – appears to mark a departure from its previous rulings on the definition of extraordinary circumstances. So far as bird strikes are concerned, it means aircraft carriers will no longer be obliged to pay passengers compensation for delays or cancellations caused by such events if they can prove that all measures were taken to prevent the collision occurring.

In this case, the Court ruled that the checks carried out on the aircraft by the local, authorised technician at Brno airport amounted to Travel Service taking all reasonable measures to prevent the delay of the flight. It held that the second check to the aircraft was unnecessary, which meant that it was not counted as part of the time resulting from the extraordinary circumstance.

The Court took a practical view of the reasonable measures that an air carrier can take to prevent bird collisions and also noted that a carrier is not responsible for the failure of other entities, such as airports and air traffic controllers, to take their own measures to prevent such a collision.

The Court made the important point that, when a flight delay is caused not only by a collision with a bird, but also by other circumstances which are not extraordinary, such as a technical failure, the duration of the delay caused by the extraordinary circumstance will be deducted from the total length of the delay in the arrival of the flight. This means that whether the aircraft carrier is required to pay its passengers compensation will depend upon whether the portion of the delay for which the carrier is responsible is itself three hours or more. In the claimants’ case, the delay caused by the technical fault was 1 hour and 45 minutes, whilst the bird strike had lead to a delay of 3 hours and 35 minutes.

The ruling is a welcome one for an airline industry which has seen an ever diminishing pool of events that constitute extraordinary circumstances. The Court was keen to stress that whilst consumer protection was paramount,, ‘carriers must not be encouraged to refrain from taking the measures necessitated by such an incident by prioritising the maintaining and punctuality of their flights over the objective of safety’Whether the ruling will imbue courts in England & Wales with a renewed focus on this inherent trade-off remains to be seen.

HOW IN-FLIGHT WI-FI WORKS

We’ve all had the same problem: you walk too far away from your Wi-Fi router and, all of a sudden, your Wi-Fi stops working. We all know that it’s simply because the router’s signal isn’t strong enough to reach you that extra few feet away. There is sadly a limit on the strength of Wi-Fi connectivity. But, if Wi-Fi is so dependent upon your proximity to a router, doesn’t it seem strange that Wi-Fi can work in an aeroplane, 35,000 feet above the ground?

So, how does this technology work? Is the answer routers in the sky? Or an invisible cable dropped down to the ground to keep you connected, as you travel at 900 km/h through the air? Close.

More and more commercial airlines are offering their passengers on-board Wi-Fi, whether free of charge or for an extra add-on fee, and they’re all using one of two ways to do it.

We’ve all had the same problem: you walk too far away from your Wi-Fi router and, all of a sudden, your Wi-Fi stops working. We all know that it’s simply because the router’s signal isn’t strong enough to reach you that extra few feet away. There is sadly a limit on the strength of Wi-Fi connectivity. But, if Wi-Fi is so dependent upon your proximity to a router, doesn’t it seem strange that Wi-Fi can work in an aeroplane, 35,000 feet above the ground?

So, how does this technology work? Is the answer routers in the sky? Or an invisible cable dropped down to the ground to keep you connected, as you travel at 900 km/h through the air? Close.

More and more commercial airlines are offering their passengers on-board Wi-Fi, whether free of charge or for an extra add-on fee, and they’re all using one of two ways to do it.

Either, the plane will connect to satellites in geostationary orbit (over 35,000 km above the ground), which send and receive signals to Earth through receivers and transmitters, just as they do to produce television signals and weather forecasts. To do this, the plane must have an antenna on its roof, just like a car, which transmits information to and from your smartphone, and the information is simply passed between the ground and the plane via the satellite. The plane will then have an on-board router that will be used to convert this into Wi-Fi signal for the passengers.

Alternatively, the plane may use ground-based mobile broadband towers to send signals up to the aircraft’s antennas (this time on the base of the plane). The way this works is that, as the plane travels through the air, it will automatically connect to the signals of the nearest tower below its path. The only problem with this is when a plane passes over a large body of water or remote terrain, where there aren’t any broadband towers below, which results in a break in connectivity – just like wandering with your laptop into your garden.

But all of this clever technology doesn’t come cheap (or quickly). The US has the best developed infrastructure of towers and satellite connectivity, so your Wi-Fi on a commercial flight operated by a US company is likely to be cheaper and quicker than on a trip through Europe. The price comes primarily from the antennas which have to be fitted onto the aeroplanes to make the Wi-Fi work. These increase the aeroplane’s drag, which increases fuel costs, without forgetting the added engineering and maintenance costs involved. All of these costs are passed onto the consumer, with Wi-Fi usually being an ‘added’ (costly) extra on today’s flights. What’s more, you might have noticed that, even once you do get yourself connected to the Wi-Fi, it’s often painfully slow. That’s because a satellite connection can only currently offer a speed of up to around 12 Mbps (as opposed to the average U.K household Wi-Fi speed of 28.9 Mbps) and this can be even slower still if everyone on the plane is trying to connect.

But, that being said, technology is moving quickly. The speed and the price of aeroplane Wi-Fi is set to improve as more and more competitors enter the market and innovation truly takes off in this relatively new area of technology. Plus, even 12 Mbps cannot really be complained about at 35,000 feet, now, can it?

A STEALTH DEATH TAX? THE LORD CHANCELLOR INCREASES PROBATE FEES

The government ignored opposition and is going ahead with the proposed probate fee increase. For estates worth over £2 million the fee could now be £20,000

WHAT IS PROBATE?

Probate describes the legal and financial processes involved in dealing with the property, money and other assets of the deceased. This normally involves the appointment of an executor who will deal with the deceased’s estate.

The government is to increase probate fees and thereby seeks to generate roughly £300m. The Joint Committee on Statutory Instruments raised concerns about the hike, in particular whether the proposed fees were proportionate.

The government ignored opposition and is going ahead with the proposed probate fee increase. For estates worth over £2 million the fee could now be £20,000.

WHAT IS PROBATE?

Probate describes the legal and financial processes involved in dealing with the property, money and other assets of the deceased. This normally involves the appointment of an executor who will deal with the deceased’s estate.

The government is to increase probate fees and thereby seeks to generate roughly £300m. The Joint Committee on Statutory Instruments raised concerns about the hike, in particular whether the proposed fees were proportionate. It questioned whether charging a fee for the administration of probate in excess of the cost of this service can really be termed a ‘fee’. (See the report here.)

More importantly, the fee increase can be seen as a further death tax by stealth, the introduction for which the Lord Chancellor has no powers. This is recognised in the report which sets out that “it is an important constitutional principle that there is no taxation without the consent of parliament, which must be embodied in statute and expressed in clear terms”

  • £300 for estates worth more than £50,000 and up to £300,000
  • £1,000 for estates worth more than £300,000 and up to £500,000
  • £4,000 for estates worth more than £500,000 and up to £1 million
  • £8,000 for estates worth more than £1m and up to £1.6 million
  • £12,000 for estates worth more than £1.6m and up to £2 million
  • £20,000 for estates worth more than £2 million

The current fees stand at £215 for individual applications, and £155 for those applying for probate through a solicitor. The rise will therefore amount to an increase between 40 per cent and 9,202 per cent. There is widespread disagreement with the fee increases. This is reflected in the results of the consultation, which received 853 responses of which 810 disagreed with the proposed fees. (See the Government’s response to the consultation here.)

The Ministry of Justice’s response was that ‘over half of estates [will] pay nothing and over 90 per cent pay less than £1,000’. The increase will take effect next month, though the precise date is yet to be announced.

LORD CHANCELLOR LIABLE TO COMPENSATE FOR JUDGE’S “GROSS AND OBVIOUS IRREGULARITY”

The Court of Appeal held in a unanimous decision on 10 April 2017 in the case of LL v The Lord Chancellor [2017] EWCA Civ 237 (available here) that a claim can be brought against the Lord Chancellor following a High Court judge’s ‘gross and obvious irregularity’.

Jackson LJ, with whom King and Longmore LJJ agreed, stressed that this decision did not traverse the long-established principle of judicial immunity from suit and should not be considered ‘the thin end of the wedge’ for claims against judges as this case was ‘unusual’ and ‘exceptional’.

The Court of Appeal held in a unanimous decision on 10 April 2017 in the case of LL v The Lord Chancellor [2017] EWCA Civ 237 (available here) that a claim can be brought against the Lord Chancellor following a High Court judge’s ‘gross and obvious irregularity’.

Jackson LJ, with whom King and Longmore LJJ agreed, stressed that this decision did not traverse the long-established principle of judicial immunity from suit and should not be considered ‘the thin end of the wedge’ for claims against judges as this case was ‘unusual’ and ‘exceptional’.

The appeal focussed on a series of orders given by Ms. Justice Russell in April 2014, in respect of the custody of the claimant’s son, referred to as M. These orders were all breached by LL leading to Russell J finding LL to be in contempt of court and sentencing him to 18-months imprisonment. When this conviction was appealed, a differently constituted division of the Court of Appeal upheld the appeal and ordered the immediate release of LL.

In April 2015, LL commenced a claim in the High Court against the Lord Chancellor seeking damages pursuant to sections 6, 7(1) and 9(3) of the HRA following his unlawful imprisonment. Foskett J dismissed this appeal on the basis that Russell J’s conduct did not amount to a ‘gross and obvious irregularity’.

When LL appealed this decision to the Court of Appeal in the instant case, the parties agreed Russell J had made a series of failings, the dispute was whether they passed what was described as the ‘very high threshold’ of being a gross and obvious irregularity.

In the Court of Appeal’s decision, Ms Justice Russell made a series of 6 errors, the cumulative effect of which amount to a gross and obvious irregularity:

  1. She included in a recital to an order the court’s ‘expectation’ that LL secure the return of M from Singapore by instigating proceedings there if necessary.
  2. She failed to recuse herself on grounds of apparent pre-determination or bias.
  3. She required the defendant in what had become criminal proceedings to give evidence, rather than warning him the proceedings had moved from the family to the criminal jurisdiction and he did not need to give evidence.
  4. When having made such a requirement to give evidence, she failed to permit the defendant to put his case first, instead he was subjected to an immediate cross-examination.
  5. She conflated LL’s non-compliance with court orders (some of which were impossible to meet and were only proved to the balance of probabilities) with a deliberate breach of the court orders.
  6. The defendant was not afforded the opportunity to make any submissions in mitigation following being found guilty and the judge passing sentence.

Russell J’s finding of guilt following LL’s breach of an order which could not be complied with amounted to a gross irregularity which would be obvious to anyone familiar with the court process.

This case is based on its own unique facts and any subsequent cases would be equally subjective. Indeed, Jackson LJ held that in reaching the decision the court was not assisted by comparing the significance of the breach with previously decided cases. It is unlikely that this case will be the catalyst of a breed of new claims against the judiciary.

AEROTOXIC SYNDROME NOT A PROPER ISSUE TO BE EXAMINED IN THE INQUEST INTO THE DEATH OF BRITISH AIRWAYS CO-PILOT

The inquest into the death of British Airways co-pilot Richard Westgate commenced on 6 April 2017 at the Salisbury Coroner’s Court.

WHAT IS AEROTOXIC SYNDROME

“Aereotoxic syndrome” is the term given to the illness caused by exposure to contaminated air in jet aircraft. The condition has not been recognised by medicine and claims of health effects were found to be unsubstantiated by the House of Lords Science and Technology Committee (The report can be found here.). Cabin air contamination is said to occur in the following way.

The inquest into the death of British Airways co-pilot Richard Westgate commenced on 6 April 2017 at the Salisbury Coroner’s Court.

WHAT IS AEROTOXIC SYNDROME

“Aereotoxic syndrome” is the term given to the illness caused by exposure to contaminated air in jet aircraft. The condition has not been recognised by medicine and claims of health effects were found to be unsubstantiated by the House of Lords Science and Technology Committee (The report can be found here.). Cabin air contamination is said to occur in the following way. For a comfortable environment and the appropriate cabin pressure to breathe at high altitude, warm compressed air is required. This is supplied direct from the jet engines, known as ‘bleed air’. This air is mixed with the air in the cabin. Jet engines have wet seals which keep oil and air apart. This is important as jet engines require synthetic oils for lubrication, which contain ingredients such as tricresyl phosphate, an organo-phosphate. The wet seals are not 100% effective and through wear their effectiveness can decline. In such an event the oil and air would mix with the air in the engine and as a result contaminated air would get into the cabin.

Mr Westgate died in 2012 in unexplained circumstances after seeking treatment for what he thought was “aerotoxic syndrome”. The post mortem examinations gave the causes of death as either pentobarbital toxicity or lymphocytic myocarditis. Prior to his death, Mr Westgate was said to have suffered from excruciating pain for which he sought specialist care in the Netherlands.

At the start of the inquest, coroner Dr Simon Fox QC stated that : “Exposure to organophosphate in the course of his employment as a commercial pilot is not a proper issue to be examined by this inquest”. He went on and explained that the inquest would consider whether Mr Westgate had died from an overdose, intended or not, of pentobarbital, an insomnia drug. It will further explore whether Mr Westgate had been suffering from an inflammation of the heart muscle, myocarditis.

This early decision seems to be at odds with previous coroner, Sheriff Stanhope Payne’s report, dated 16 February 2015, issued under Regulation 28 of The Coroners (Investigations) Regulations 2013. (The report can be found here.). The report set out that testing of samples taken both prior and after the death,

disclosed symptoms consistent with exposure to organophosphate compounds in aircraft cabin air, which can cause lymphocytic myocarditis. The report also highlighted the coroner’s concerns about potential exposure to organophosphate by occupants of aircraft cabins, that the resulting impairment to the health of pilots may lead to death and that there was no real-time monitoring to detect such compounds in cabin air.

The inquest attracted the attention of the airline industry with the Civil Aviation Authority being involved, and representatives of a number of other airlines watching from the public gallery. The inquest continues.

CASE SUMMARY: THE SUPREME COURT CLARIFIES THE MEANING OF “REGULARLY”

Judgement was handed down in Isle of Wight Council v Platt [2017] UKSC 28 (available here). The Supreme Court provided guidance on what ‘failed to attend regularly’ meant in the context of the offence contrary to section 444(1) of the Education Act 1996.

THE FACTS

On 30 January 2015, Mr Platt, the father of a child, (‘Mary’), sent a letter to the school attended by the child requesting Mary to be absent during term time. This was for the period between 12 April and 21 April 2015. On 9 February 2015, the head teacher refused the request. Coincidentally, Mary’s mother, who had been separated from Mr Platt, had also taken Mary on holiday in February 2015, which had not been authorised by the school either.

Judgement was handed down in Isle of Wight Council v Platt [2017] UKSC 28(available here). The Supreme Court provided guidance on what ‘failed to attend regularly’ meant in the context of the offence contrary to section 444(1) of the Education Act 1996.

THE FACTS

On 30 January 2015, Mr. Platt, the father of a child, (‘Mary’), sent a letter to the school attended by the child requesting Mary to be absent during term time. This was for the period between 12 April and 21 April 2015. On 9 February 2015, the head teacher refused the request. Coincidentally, Mary’s mother, who had been separated from Mr Platt, had also taken Mary on holiday in February 2015, which had not been authorised by the school either.

Mr Platt went ahead and took Mary to Disney World in Florida regardless. Accordingly, the council issued Mr. Platt with a fixed penalty notice under the Education Act 1996. As this fine had not been paid within the requisite 21-day deadline, the fine increased to £120. This went unpaid too. Mr Platt was charged with an offence contrary to section 444(1) of the Education Act 1996. On 12 October 2015, a trial took place where the Magistrates determined that Mr Platt had no case to answer. They reasoned that ‘we have to ask ourselves whether M was a regular attendee. Before holiday with Dad, her attendance was 95%. Afterwards, it was 90.3% …. The document supplied on refusal of leave stated that satisfactory attendance is 90-95%’.

The council appealed by way of case stated. The High Court held that the magistrates had not erred in taking into account the child’s attendance outside the absent dates in determining the percentage attendance of the child. (see our post on the High Court decision here.)

THE SUPREME COURT DECISION

Lady Hale explained that the High Court certified a different point of law, namely under section 1 of the Administration of Justice 1960 what information is relevant to the specific period complained off when assessing whether an offence had been committed under section 444(1) of the 1996 Act.

In considering what ‘regular’ meant, Lady Hale considered that the three possible meanings interpretations. These were:

  1. At regular intervals.
  2. Sufficiently frequently.
  3. In accordance with the rules.

In accordance with the rules. In regard to ‘regular’ meaning attendance ‘at regular intervals’ was discarded as a possible interpretation, as this would have enabled a child’s attendance to be regular even if he was regularly late.

In regard to ‘sufficiently frequently’, the court considered that this interpretation accorded with what was meant when one talked of being a ‘regular’ at the pub or a ‘regular’ church. Attendance regularly could not be construed in this way. This was because the purpose of the Education Act 1996 was to increase the scope and character of compulsory state education. Lady Hale further reasoned that the 1994 Act sought to tighten not to relax parental liability. Most significantly, this interpretation would not have been sufficiently certain to found a criminal offence.

The court determined that ‘in accordance with the rules’ was the correct interpretation. This was because, while a minor or trivial breach of the rules could lead to criminal liability, this could be countenanced by a sensible prosecution policy. Further, as statutes imposing criminal liability should be drafted so that everyone knew where they stood this was the only interpretation that would achieve this.

The court, therefore, concluded that regularly in the context of offence meant ‘in accordance with the rules prescribed by the school’.

The decision will shift the attention on the attendance rules and policies of schools. This may result in an increase in judicial review claims.

Fact is that the now Mr. Platt will be reissued with a summons to appear at the Magistrates Court and the entire process begins. As regards Mary’s mother, she had decided to pay the fixed penalty fine at the time it was issued.

GLOBAL V AABAR: THE COURT OF APPEAL STATE THAT CONTRACTUAL NEGOTIATIONS SHOULD BE CLEAR AND UNEQUIVOCAL

In the recent case of Global Asset Capital Inc and another v Aabar Block S.A.R.L and others [2017] EWCA Civ 37, the Court of Appeal held that the High Court was wrong to find that following a ‘subject to contract’ offer letter, a contract was concluded during a telephone call which was inconsistent with subsequent communications.

BACKGROUND:

For the purposes of the appeal the following version of events was accepted. On 23 April 2015, the claimants sent a letter marked ‘without prejudice – subject to contract’ wherein they proposed to pay €250 million for certain rights. On 5 May 2015, the second claimant was informed by the second defendant’s CEO that a board meeting was due on 6 May 2015 where the letter would be considered. On 6 May 2015, the CEO of the second defendant telephoned the second claimant. The claimants case was, that during the call a contract had been agreed subject to two conditions.

In the recent case of Global Asset Capital Inc and another v Aabar Block S.A.R.L and others [2017] EWCA Civ 37, the Court of Appeal held that the High Court was wrong to find that following a ‘subject to contract’ offer letter, a contract was concluded during a telephone call which was inconsistent with subsequent communications.

BACKGROUND:

For the purposes of the appeal the following version of events was accepted. On 23 April 2015, the claimants sent a letter marked ‘without prejudice – subject to contract’ wherein they proposed to pay €250 million for certain rights. On 5 May 2015, the second claimant was informed by the second defendant’s CEO that a board meeting was due on 6 May 2015 where the letter would be considered. On 6 May 2015, the CEO of the second defendant telephoned the second claimant. The claimants case was, that during the call a contract had been agreed subject to two conditions. First, that the second claimant resend the offer letter in an open and binding form and second, he provides satisfactory evidence of his ability to fund the transaction. Later that day the second claimant sent an email attaching the letter ‘as discussed’. On 7 May 2015, the second claimant texted the CEO of the second defendant that fully committed terms were to follow. On 9 May 2015, the second claimant emailed the CEO of the second defendant repeating the key commercial terms of the original offer but included various additional and different terms. On 10 May 2015, the CEO of the second defendant responded that the claimants’ offer was not accepted.

The claimants sought a declaration that there was a valid contract and applied for specific performance. The defendants requested summary judgment but this was refused by Walker J. The defendants appealed.

THE RULING:

The Court of Appeal held that Walker J erred in not considering the parties’ conduct after 6 May 2015 telephone conversation. Hamblen LJ delivering the judgment, with whom MacFarlane LJ agreed, emphasised that this was not a question of the interpretation of the terms of the contract, but was a determination whether a contract had been concluded. The court relied on the well-established principle set out in Hussey v Horne-Payne (1878) 4 App Cas 311, that in establishing whether a contract had been made the court will look at the whole of the negotiations. Hamblen LJ relying on Pagnan SPA v Feed Products Ltd [1987] 2 Lloyd’s Rep 601, noted that the rule also applied to situations where both oral and written communications form part of the negotiations.

The court further held that even ignoring the parties’ subsequent communications, the claimants had no real prospect of success as the offer letter prior to the telephone call on 6 May 2015 was marked ‘subject to contract’. This meant that it was not open to the defendants simply to accept the offer. The claimants’ alternative case that the defendants made the offer also failed on two bases. First, this was not the claimants’ pleaded case and second, the defendants’ request that the claimant re-send the offer was inconsistent with this contention in any event.

During pupillage all our barristers to be are taught to take great care over settling cases and to read Foskett on Compromise. For frequently in a rush to close a file errors are made leading to claims now being made against the lawyer who erred. Undertaking drafting terminology is key.

So what effect does “subject to contract” actually have when inserted in an offer to settle? It shows that the parties are still negotiating and do not intend to be bound until a formal contract is exchanged. With subject to contract, it is only reasonable to expect the parties to enter into a proper and comprehensive sale and purchase agreement documenting all the terms agreed upon between the parties before a valid and binding contract is in existence between the parties. In conclusion, an agreement will only come into force if it is intended to bound the parties at the time the agreement was made. An agreement “subject to contract” will only bind the parties upon the conclusion and creation of a binding and valid contract, after all the terms are agreed.

SUMMARY:

  1. An offer must be accepted clearly and unequivocally.
  2. The court is entitled to consider all communications between the parties when deciding whether a contract has been concluded.
  3. An offer marked subject to contract cannot be accepted so as to form a contract.

RULE 16.3(7) – STATEMENT OF UNDER VALUE TO BE INCLUDED IN THE CLAIM FORM?

Sir David Eady J delivered a judgment on 30 March in the case of Mohamed Ali Harrath v Stand for Peace Limited and Samuel Westrop [2017] EWHC 653 (QB) (available here) in which he held that a claimant is entitled to recover damages that exceed the statement of value included in the claim form.

The first defendant’s website described the claimant as a “convicted terrorist”, per paragraph 3 of Eady J’s judgment, those words were “plainly seriously defamatory to the claimant”. At paragraph 6, Eady J held that there “simply was no evidence to support the allegation of terrorism”.

Sir David Eady J delivered a judgment on 30 March in the case of Mohamed Ali Harrath v Stand for Peace Limited and Samuel Westrop [2017] EWHC 653 (QB) (available here) in which he held that a claimant is entitled to recover damages that exceed the statement of value included in the claim form.

The first defendant’s website described the claimant as a “convicted terrorist”, per paragraph 3 of Eady J’s judgment, those words were “plainly seriously defamatory to the claimant”. At paragraph 6, Eady J held that there “simply was no evidence to support the allegation of terrorism”.

The claimant had indicated on the claim form that he expected to recover no more than £10,000. At paragraph 10 of the judgment, the notional upper limit for damages in libel cases was described as being “around £300,000”. Given that “few if any allegations could be more serious” than that of being a terrorist, Eady J held at paragraph 11 that “an allegation of terrorism is likely to attract in most cases an award towards the upper end of the scale” referred to above.

As a result, had the claimant inadvertently limited his claim to merely £10,000 and not a significantly higher, six-figure sum?

At paragraph 22 of the judgment, Eady J considered Rule 16.3 of the CPR. This rule requires the claimant to provide an estimated value of his claim if it is a claim for value and he is able to provide an estimate. Sub-paragraph 7) of that rule reads as follows: “the statement of value in the claim form does not limit the power of the court to give judgment for the amount which it finds the claimant is entitled to.” On that basis, the court awarded damages in the sum of £140,000.

Paragraph 22 also records the claimant’s understandable willingness “to pay any additional fee if necessary.” This single sentence demonstrates the real interest in this case and is a reference to the fact that the court fee for issuing a claim is directly linked to the estimated value of the claim. Therefore, rule 16.3(7) leaves the door open for a claimant to undervalue his claim substantially so as to pay a much lesser court fee at the time of issue. If the claim is successful, the difference to be paid to the court can be paid at that point, possibly even out of the damages. If the claim is unsuccessful, the claimant will have benefited by paying the lower court fee. This tactic would most likely be more successful in claims for unliquidated damages than in cases for a specified sum, for obvious reasons. However, claimants will need to be able to explain why the statement of value in the claim form backed by a statement of truth does not accord with the final level of damages being sought and defendants should be alert to such differences, as indeed should the court.

Unless the court is alert to this possible tactical advantage being taken, the litigation risk for claimants can be deliberately reduced. According to the court fees applicable from 7 March 2017, the maximum issue fee for a claim valued at less than £10,000 is £455, compared to a fee of £10,000 for claims of £200,000 and above.

Undervaluing a claim could be very valuable indeed and quite naughty.

THE AIR ACCIDENTS INVESTIGATION BRANCH PUBLISHES REPORT ON THE SHOREHAM AIR DISASTER

The Air Accidents Investigation Branch published its report into the accident that occurred in Shoreham on 22 August 2015. The sole purpose of the investigation and the report is the prevention of accident and not apportioning blame. This is a brief summary of the key findings as set out in the report.

The normal technique for this manoeuvre was for the aircraft to enter it at 350 KIAS (Knots indicated air speed). In fact, the Hawker entered its ascent at 310 KIAS. The aircraft’s speed was varied and there was not full thrust as the aircraft was in the ascending trajectory of the manoeuvre. There is no evidence of any pre-existing mechanical defect that would have prevented the engine from responding to the pilot’s throttle inputs.

The Air Accidents Investigation Branch published its report into the accident that occurred in Shoreham on 22 August 2015. The sole purpose of the investigation and the report is the prevention of accident and not apportioning blame. This is a brief summary of the key findings as set out in the report.

The normal technique for this manoeuvre was for the aircraft to enter it at 350 KIAS (Knots indicated air speed). In fact, the Hawker entered its ascent at 310 KIAS. The aircraft’s speed was varied and there was not full thrust as the aircraft was in the ascending trajectory of the manoeuvre. There is no evidence of any pre-existing mechanical defect that would have prevented the engine from responding to the pilot’s throttle inputs. The left altimeter under read by approximately 100 ft, while the right altimeter had a latent defect, which meant that it was no longer providing a synchronising signal to the left altimeter. The report identified no other technical defects as relevant to the accident.

The pilot needed to take the aircraft to 3,500 ft at the apex to ensure that on completion of the manoeuvre the aircraft was 500 ft above ground. Instead, the aircraft achieved only 2,700 ft height at its apex. Airspeed at the apex was 105 KIAS, which is at the lower end of the range of 100 to 150 KIAS appropriate for this manoeuvre.

In short, the aircraft had lower altitude than required at the apex. The AAIB reported that it was possible that the pilot misread or misinterpreted speed and height indicators during the manoeuvre or recalled these for a different aircraft type, possibly a Provost.

The risk assessment for the air display on 22 August 2015 relied upon compliance with Rule T of the Rules of the Air; that no aircraft should fly closer than 500ft to any person, vehicle, vessel or structure to mitigate the hazard presented by aircraft displaying over areas outside the control of the organisers.

Key is that the report recommends that the Department of Transport carry out an independent review of the rules and regulations governing air displays.

Furthermore, an inquest is set to begin with the pre-inquest review hearing to take place on 20 June 2017 at the Coroner’s Court at Crawley.