28 May 2009

Jurisdiction to make Declarations before Trial: Hayim v Couch

It takes a lot of courage for a deputy judge to extend the envelope of settled practice and Mr. Stephen Smith QC is to be congratulated for doing just that in Hayim and others v Couch [2009] EWHC 1040 (Ch). In this case Mr Smith was asked to make declarations of right without there having been a trial, or indeed any hearing on the merits of the claims.

The request was made in order to give effect to a compromise that had been negotiated shortly before a very complex and probably messy share dealing claim between relations was due to come on for trial. The parties had reduced the terms of their settlement to writing and their settlement agreement provided for a consent order that contained a number of declarations on the validity of share dealings that had been the subject of the dispute.

Both parties referred the judge to authorities dating back to Williams v Powell [1984] WN 141 that the court does not make declarations of right either on admissions or in default of pleading.  In Wallersteiner v. Moir [1974] 1 WLR 991, for example, Lord Justice Buckley had said at page 1029
"It has always been my experience and I believe it to be a practice of very long standing, that the court does not make declarations of right either on admissions or in default of pleading. A statement on this subject of respectable antiquity is to be found in Williams v. Powell [1894] WN 141, where Kekewich J, whose views on the practice of the Chancery Division have always been regarded with much respect, said that a declaration by the court was a judicial act, and ought not to be made on admissions of the parties or on consent, but only if the court was satisfied by evidence."
However, Mr. Smith noted that the rule was not immutable and that judges had become increasingly willing to make declarations, particularly since the CPR came into force. He drew the following conclusions about the rule:
"(1) That the rule that a court should not grant a declaration except after a trial was only ever a rule of practice.
(2) That the rule should not be followed if following it would deny the claimant the fullest justice to which he is entitled.
(3) That the rule is less strong since the coming into force of the Civil Procedure Rules than it was when the Rules of the Supreme Court held sway.
(4) That where the parties' consent to (or agree not to oppose) the grant of declaratory relief and that consent forms part of a
bona fide commercial bargain entered into between them to avoid the need for a trial, the Court is likely to consider it necessary to grant the declarations sought in order to do justice between them."
Applying those principles the learned deputy judge acceded to the parties' request and made the declarations in the terms sought.

Declarations as to the subsistence of intellectual property rights or whether they have been infringed are routinely sought in statements of case and the reluctance of courts to grant declarations of right without trial can occasionally be a stumbling block.   The problem is that some rights such as patents confer monopolies that affect the public at large as well as the parties to the action. Mr Smith's judgment may assist in some negotiations such as over whether an original work has been copied or not but probably not much further.

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