House of Lords
Session 1997-98
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Judgments - Connelly (A.P.) v. R.T.Z Corporation Plc and Others


  Lord Goff of Chieveley   Lord Lloyd of Berwick   Lord Hoffmann
  Lord Hope of Craighead   Lord Clyde





ON 24TH JULY 1997


My Lords,

    There are before your Lordships two appeals, both arising out of the same proceedings. The plaintiff in the action is Edward Connelly, who is domiciled in Scotland. In 1971, when he was 21 years old, he went to South Africa. For a period of about five and a half years, between 1977 and 1982, he was employed by Rossing Uranium Ltd. ("R.U.L."), which carried on the business of mining uranium at Rossing in Namibia. He returned to Scotland in about 1983. In 1986 it was discovered that he was suffering from cancer of the larynx. He subsequently underwent a laryngectomy, and has since breathed through a tube in his throat. He claims that his cancer was the result of inhaling silica uranium and its radioactive decay products at the mine .

    R.U.L. is a subsidiary of the first defendant, the R.T.Z. Corporation Plc ("R.T.Z."), which is an English company with its registered office in London. In March 1988 Scottish solicitors acting for the plaintiff wrote to R.T.Z. raising the question of compensation. R.T.Z. replied that the claim should be addressed to R.U.L., and forwarded the letter to R.U.L. in Namibia. R.U.L.'s insurers denied liability. In February 1990 the Legal Assistance Centre of Windhoek in Namibia lodged a claim for compensation on behalf of the plaintiff under the Workmen's Compensation Act 1941 of South Africa and Namibia. However the Workmen's Compensation Commissioner rejected the claim.

    On 15 December 1993 the plaintiff obtained a legal aid certificate to bring proceedings against R.T.Z. in England, and the writ and statement of claim in the present action were served on R.T.Z. on 19 September 1994. It was alleged that R.T.Z. had devised R.U.L.'s policy on health, safety and the environment, or alternatively had advised R.U.L. as to the contents of the policy. It was further alleged that an employee or employees of R.T.Z., referred to as R.T.Z. supervisors, implemented the policy and supervised health, safety and/or environmental protection at the mine. Following receipt of information from R.T.Z.'s solicitors that certain of these "R.T.Z. supervisors" had been transferred to another subsidiary of R.T.Z., R.T.Z. Overseas Services Ltd. ("R.T.Z. Overseas") which was also an English company registered in London, the plaintiff obtained leave to amend his writ and statement of claim to join R.T.Z. Overseas as second defendants. This was duly done.

The course of the proceedings

    On 28 October 1994 R.T.Z. applied to the High Court in London for a stay of the proceedings on the ground that Namibia was the appropriate forum for the trial of the action. It was later conceded by the plaintiff that Namibia was prima facie the jurisdiction with which the claim had the most real and substantial connection. The application for a stay came before Sir John Wood, sitting as a High Court judge. He gave his judgment on 28 February 1995. He referred in particular to section 31(1) of the Legal Aid Act 1988, which provides that:

     "Except as expressly provided by this Act or regulations under it . . . b) the rights conferred by this Act on a person receiving advice, assistance or representation under it shall not affect the rights or liabilities of other parties to the proceedings or the principles on which the discretion of any court or tribunal is normally exercised."

He held that, in deciding whether to exercise his discretion to grant a stay, he was bound by that subsection to disregard the fact that the plaintiff was in receipt of legal aid in this country; and, having regard to the close connection of the claim with Namibia, he decided to stay the action, notwithstanding that there was no financial assistance, in the form of legal aid or otherwise, available to the plaintiff in Namibia to enable him to pursue his claim there. The plaintiff was refused leave to appeal. On 18 August 1995 the Court of Appeal (Neill, Waite and Swinton Thomas L.JJ.) gave the plaintiff leave to appeal, but dismissed his appeal. The principal judgment was delivered by Waite L.J. He concluded that Sir John Wood was right to treat the non-availability of legal aid in Namibia as irrelevant to his decision, the exclusion of consideration of legal aid being consistent with section 31(1)(b) of the Legal Aid Act 1988. Neill and Swinton Thomas L.JJ. considered that the subsection placed an insuperable obstacle in the way of the plaintiff.

    On 2 October 1995 the plaintiff's solicitors informed the defendants that the plaintiff would not proceed with a petition for leave to appeal to this House; but that the solicitors had entered into a conditional fee agreement with the plaintiff, and that therefore a summons would be issued seeking the lifting of the stay. Conditional fee agreements between legal advisers and clients had been authorised by section 58 of the Courts and Legal Services Act 1990, and by the Conditional Fee Agreements Order 1995 (S.1. 1995 No. 1674) which came into force on 5 July 1995. The plaintiff's legal aid certificate was discharged; but his solicitors later made it plain that they could not rule out the possibility that at some point in the future the plaintiff might again apply for legal aid. The defendants expressed the opinion that it was only a matter of time before the plaintiff was back on legal aid again, in view of the size, scope and cost of the proposed trial. Indeed it became apparent that at that time the conditional fee agreement was limited to the application to discharge the stay and any appeal from it, and certainly did not extend so far as to include the trial of the action.

    The plaintiff's application to lift the stay came before Mr. David Steel Q.C., sitting as a Deputy High Court Judge, on 27 October 1995. Before him, the plaintiff's solicitors stated that they would enter into further conditional fee agreements if that was "the only way of ensuring that the plaintiff gets justice." Mr. Steel accepted that this statement was made in good faith, but he concluded that it was, to put it at its lowest, astonishingly ambitious. He took a realistic view of the situation, and considered that it was almost inevitable that an application for legal aid would in due course be made. It followed that in reality the situation had not changed. He therefore dismissed the plaintiff's application, and refused leave to appeal.

    The plaintiff applied ex parte to the Court of Appeal for leave to appeal from Mr. Steel's order. On 29 January 1996, the plaintiff having offered undertakings that he would not apply for legal aid and that his solicitors would continue the conditional fee agreement on appropriate terms until the conclusion of the trial or earlier order, the Court of Appeal (Millett and Ward L.JJ.) granted him leave.

    On 2 May 1996 the Court of Appeal (Sir Thomas Bingham M.R., Evans and Ward L.JJ.) allowed the plaintiff's appeal. The leading judgment was delivered by the Master of the Rolls. He rejected the realistic approach adopted by Mr. Steel, especially as the limited conditional fee agreement was supported by the undertakings given by the plaintiff's solicitors on the application for leave to appeal. The plaintiff was able to proceed without recourse to legal aid, and so section 31(1)(b) of the Act of 1988 no longer stood in his way. Accordingly the Court considered the matter on the basis of the principles stated by your Lordships' House in Spiliada Maritime Corporation v. Cansulex Ltd. [1987] A.C. 460. On 2 May 1996 they decided to allow the appeal. The decisive consideration is to be found in the following passage from the judgment of Sir Thomas Bingham M.R.

     "But faced with a stark choice between one jurisdiction, albeit not the most appropriate in which there could in fact be a trial, and another jurisdiction, the most appropriate in which there never could, in my judgment, the interests of justice would tend to weigh, and weigh strongly in favour of that forum in which the plaintiff could assert his rights".

The defendants petitioned this House for leave to appeal from this decision, and the plaintiff then petitioned for leave to appeal out of time from the decision of the Court of Appeal of 18 August 1995. Your Lordships' House gave leave in both cases.

    There followed a minor complication. The plaintiff lodged a notice of appeal, but did not post the required security. Accordingly on 3 March 1996 his appeal stood dismissed pursuant to Practice Direction 11.1. The plaintiff then petitioned for his appeal to be restored, and his petition was granted.

Section 31(1)(b) of the Legal Aid Act 1988

    I propose to turn at once to consider the relevance of this subsection. It was regarded as decisive, both by Sir John Wood and by the Court of Appeal, in relation to what I will call the first appeal. There is no comparable statutory provision in respect of conditional fee agreements, and so no argument of this kind is available to R.T.Z. in respect of the second appeal. This of itself presents a remarkable contrast between the two appeals.

    I have already set out the terms of the subsection. The suggestion is that the subsection has the effect that, in the case of an application for a stay of proceedings on the principle of forum non conveniens, the fact that the plaintiff is in receipt of legal aid in this country cannot be taken into account because the subsection provides that the receipt of legal aid "shall not affect . . . the principles on which the discretion of any court or tribunal is normally exercised." I feel bound to say that I find it surprising that the subsection should have this effect. I can fully understand that, in matters arising in the course of legal proceedings in this country, the fact that one party is in receipt of legal aid should not be allowed to distort the legal process, whether as regards the rights or liabilities of other parties, or as regards the principles on which judicial discretions are exercised. The limited purpose of legal aid is, after all, to enable a person, who would otherwise lack the means to do so, to litigate; and it is understandable that his receipt of legal aid should not be allowed to have any such effect. But when it comes to an application by the other party to stay proceedings brought in this country by a legally aided plaintiff on the ground of forum non conveniens, it is difficult to see why the fact that the plaintiff is legally aided, which would in the circumstances be a relevant fact to be taken into account on the application, should be excluded. In such circumstances it is the exclusion of that fact, rather than its inclusion, which would have the fact of distorting the legal process.

    In approaching the question whether the subsection has the effect of excluding the receipt of legal aid from the relevant considerations in cases of forum non conveniens, it is of some interest to consider the analogous situation where a stay of proceedings is sought to enable the matter in dispute to go to arbitration pursuant to an arbitration agreement between the parties. Under section 4(1) of the Arbitration Act 1950 (formerly section 4 of the Arbitration Act 1889) the court had a discretion to grant a stay of proceedings brought in breach of an arbitration clause; and, provided the statutory conditions for the grant of a stay were satisfied, the court would grant a stay unless the person resisting the application could persuade the court that good reason existed why a stay should not be granted. (For the present law, see section 9 of the Arbitration Act 1996.)

    For present purposes the relevant authorities on this subject begin with Smith v. Pearl Assurance Co. Ltd. [1939] 1 All E.R. 95, decided before legal aid was made available by the Legal Aid and Assistance Act 1949, in which the provisions of subsection 31(1)(b) of the Act of 1986 first appeared in identical terms in section 1(7)(b) of Act of 1949. In the case of Smith the plaintiff claimed that, by reason of his poverty, he could obtain assistance from the Poor Persons Committee in court proceedings, but that such assistance was not available to him in arbitration. The Court of Appeal nevertheless stayed his action to enable the matter to go to arbitration under an arbitration clause binding on him, holding that poverty did not of itself justify the court to refuse to give effect to the agreement to arbitrate. A similar conclusion was reached in Ford v. Clarksons Holidays Ltd. [1971] 1 W.L.R. 1412, in which no question of legal aid arose. The party resisting a stay in that case simply claimed that the cost of arbitration was much greater than the cost of a County Court action. The Court of Appeal, following the earlier decision in Smith, held that this was not a good reason for refusing a stay.

    In In Re Saxton Decd [1962] 1 W.L.R. 968, the Court of Appeal duly gave effect to section 1(7)(b) of the Act of 1949, not in connection with an arbitration clause, but with an order made in the course of proceedings in court. An application was made by the plaintiff to the trial judge for an order that the defendants should produce certain documents for examination by a handwriting expert instructed by the plaintiffs. The judge granted the application but, having regard to the fact that the plaintiffs were legally aided, imposed a condition that the plaintiffs should disclose to the defendants any report by the expert. The Court of Appeal deleted the condition, holding that section 1(7)(b) of the Act of 1949 required the court to disregard the fact that the defendants were legally aided. However, in Fakes v. Taylor Woodrow Construction Ltd. [1973] Q.B. 436 the application of section 1(7)(b) arose in an acute form with reference to an arbitration clause. The plaintiff acted as plumbing subcontractor to the defendants, and claimed a large sum, amounting to over £80,000, from them. The defendants invoked an arbitration clause in the subcontract. The plaintiff however contended that, by reason of the defendants' default, he himself had been made insolvent and his business ruined. Legal aid was available to him in the High Court, but not in arbitration proceedings; and he claimed that, as a result of the defendants' default, he lacked the means to fight the arbitration proceedings, or even to take up an arbitration award in his favour. The Court of Appeal decided by a majority to refuse a stay. Lord Denning M.R. considered that if, as the plaintiff claimed, his insolvency arose as the result of the defendants' breach of contract, it would be a denial of justice to require him to go to arbitration, which he could not afford, instead of proceeding in the High Court, where he could get legal aid. Sir Gordon Willmer agreed, holding that there was sufficient material to justify the conclusion that there was a reasonable probability that the defendants' breaches of contract induced the plaintiff's poverty. They both concluded that section 1(7)(b) of the Act of 1949 did not compel them to reach a different conclusion. Megaw L.J., who dissented, held that that subsection did indeed compel the court to grant a stay. The decision in Fakes was later followed in Goodman v. Winchester & Alton Railway Plc [1985] 1 W.L.R. 141, and considered in Trustee of the Property of Andrews v. Brock Builders (Kessingland) Ltd. [1997] 3 W.L.R. 124, though without reference to the point arising under the Legal Aid legislation. I need not dwell upon the reasons given by Lord Denning M.R. in Fakes for holding that section 1(7)(b) did not stand in the way of his conclusion, though I am compelled to say that, as Parker L.J. was subsequently to hold (see Edwin Jones v. Thyssen (Great Britain) Ltd. (1991) 57 B.L.R. 116, 123-125), that reasoning was not persuasive. Yet the justice of the decision of the majority of the Court of Appeal was very strong; and it is startling that section 1(7)(b) should have the effect of compelling the court to refuse to do justice in a case of this kind. This prompts the question whether the decision of the majority of the Court of Appeal in Fakes can be justified on the basis that the subsection has no application in the case of an application for a stay under the Arbitration Act, where the discretion falls to be exercised not in the course of the proceedings themselves (as in the case of In re Caxton Decd [1962] 1 W.L.R. 968), but in deciding whether or not the action should be permitted to proceed at all in Court.

    For the present purposes it is not necessary for your Lordships to consider that question, which does not directly arise for decision in the present appeal. It is enough that I should record that I entertain serious doubts whether the subsection was intended to apply in that situation. I am, however, satisfied that the subsection was never intended to apply in the case of applications for a stay of proceedings on the ground of forum non conveniens. In such a case, the question at issue is whether "the court is satisfied that there is some other tribunal, having competent jurisdiction, in which the case may be tried more suitably for the interests of all the parties and for the ends of justice": see Sim v. Robinow (1892) 19 R. 665, 668, per Lord Kinnear, cited with approval in Spiliada Maritime Corporation v. Cansulex Ltd. [1987] A.C. 460, 474. It would, in my opinion, be strange indeed if the application of so broad a principle of justice should be artificially curtailed by section 31(1)(b) of the Legal Aid Act 1988, so that the receipt by the plaintiff of legal aid is automatically excluded from the range of relevant considerations. Certainly the policy underlying the subsection, as I have identified it, provides no explanation, still less justification, for so curtailing it. For the reasons I have given I am satisfied that on its true construction, the subsection does not have any such effect.

    My noble and learned friend, Lord Hope of Craighead, has drawn my attention to the comparable provisions of the Scottish Legal Aid legislation. The original Scottish Act, the Legal Aid and Solicitors (Scotland) Act 1949, received the Royal Assent on the same day as the English Act, the Legal Aid and Assistance Act 1949. The long titles of the two Acts are virtually identical, as are many provisions of the two Acts. Section 1 of each of the two Acts contains only one material distinction, which is that there is no provision in the Scottish Act equivalent to section 1(7)(b) of the English Act. This difference has persisted, so that there is still no provision in the present Legal Aid (Scotland) Act 1986 equivalent to section 31(1)(b) of the English Act of 1988.

    I do not know why this distinction exists between the English and Scottish legal aid legislation. Whatever the reason, it must transcend any consideration relating to a stay of proceedings under the Arbitration Act or on the ground of forum non conveniens. Nevertheless, the result is that in Scotland, the native home of the principle of forum non conveniens now adopted in English law, there is nothing in the legislation to prevent the availability of legal aid being taken into account when that principle is invoked. This being so, it would be most remarkable if in England alone that principle was to be curtailed by excluding any consideration of the availability of legal aid. I add for good measure that, if section 31(1)(b) has that effect, this would also lead to the extraordinary result that conditional fee arrangements can be taken into account in this context, but not the availability of legal aid. These consequences fortify me in the view that section 31(1)(b) of the Act of 1988 (and its predecessor section 1(7)(b) of the Act of 1949) were, on their true construction, never intended to have any such effect.

    It follows that, in my opinion, for the purposes of considering the question in the present case, section 31(1)(b) can be disregarded as irrelevant. Accordingly the question arising on the two appeals can be considered simply on the basis of the principles applicable in cases of forum non conveniens, in relation to the availability either of legal aid or of a conditional fee agreement. To those principles I now turn.

Forum non conveniens

    There are, as I have said, two appeals before your Lordships, one concerned with the impact of a conditional fee agreement, and the other with the impact of the availability of legal aid. In the former the defendants are the appellants, and in the latter the plaintiff is the appellant. In point of time, it was the former (which I have called the second appeal) which came first before your Lordships' House, with the leave of this House, although the relevant decision of the Court of Appeal was later than the decision of the Court of Appeal (in what I have called the first appeal) concerned with legal aid. The appeal from the latter decision was only added later when your Lordships' House granted leave to appeal to enable the two related matters to be considered together. As a result, the defendants' written case was primarily directed towards the second appeal, concerned with the conditional fee arrangement.

    The cases advanced by the two parties before your Lordships presented diametrically opposed points of view. Those representing the plaintiff are plainly concerned with what they see as a potential denial of justice to their client. Their simple position, which was accepted as decisive by Sir Thomas Bingham M.R. on the conditional fee appeal, is that it is impossible for their client's case to be presented without financial assistance, indeed very substantial financial assistance; and as such assistance is not available to him in Namibia, but is available to him in this country, justice requires that there should be no stay of his action here, as it is only here that his case can be tried at all. The commitment of the plaintiff's advisers to his case is shown, not only by his solicitors' willingness to enter into a very substantial conditional fee agreement, but also by his barristers' readiness to act pro bono in the proceedings. Moreover, your Lordships were told that at least some of the expert witnesses who were expected to give evidence on his behalf in the proceedings were also prepared to act on a conditional fee basis; though the propriety of any such arrangement was questioned by the defendants.

    From the defendants' point of view the matter appeared very differently. They see the plaintiff's claim as being highly speculative. The first defendant, your Lordships were told, is a holding company which has never traded, and has never employed anybody. The second defendant had transferred to it the contracts of employment of certain senior employees of R.U.L. from 1 January 1980, to provide them with a measure of security in the prevailing political situation and to protect their pension entitlements; its only business was to second these employees to R.U.L., which exercised full direction and control over them. The defendants also claim that the medical evidence supporting the allegation that the defendants caused the plaintiff's cancer is very thin, as is the evidence for the plaintiff's assertion that the first defendant devised the health and safety policy at Rossing. In addition, the plaintiff's claim is out of time, with the result that an English court will only hear it if it is prepared to exercise its discretion to do so under section 33 of the Limitation Act 1980, and to decline to apply the relevant Namibian time bar (as required by section 1 of the Foreign Limitation Periods Act 1984). Furthermore, having regard to the ambitious scope of the action envisaged by the plaintiff's solicitors, involving a very wide range of expert evidence, the defendants' solicitors' estimate that the costs of the trial could run into millions of pounds, whereas the plaintiff has contended that, even if he is completely successful, he will recover less than £400,000 including interest. So far as the conditional fee agreement is concerned, the defendants not only assert that the plaintiff's solicitors' expressed willingness to enter into such an agreement for the whole action is, as Mr. David Steel Q.C. held, astonishingly ambitious, but also that it is relevant to consider what arrangement the plaintiff's solicitors have made to cover the defendants' costs in the event of the plaintiff losing the action, bearing in mind that the only insurance available for this purpose from the Law Society is to cover causes of action arising in this country and is in any event limited to £100,000.

    The unstated implication underlying these matters must be that the defendants see the purpose of the action as being to put them in the position where it would pay them to settle what they see to be the plaintiff's very weak claim for a substantial sum, rather than contest the action, however strong a defence they may have, and if successful in their defence find themselves faced with irrecoverable costs far exceeding the maximum amount of the claim.