‘Constitutionalism and Private Law’: 2015 Cambridge Freshfields Lecture

‘Constitutionalism and Private Law’: 2015 Cambridge Freshfields Lecture

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Distinguished judges, friends of the Faculty,
colleagues, students, good evening and welcome. I’m Sarah Worthington, and I really am delighted
to welcome you tonight to the Law Faculty for the 2015 Cambridge Freshfields Annual
Law Lecture. This is only the second in an annual series
of lectures generously sponsored by Freshfields and organised by the Cambridge Private Law
Centre through the Faculty, but it only takes two to make a tradition, doesn’t it?
So one of the Centre’s ambitions is to facilitate informed and challenging public debate about
some of the fundamental and significant legal issues which are facing us. So we are especially
delighted tonight to welcome Lord Hoffmann. He really is a judge who is well known for
his lively decisions and his willingness to break with convention, and it’s my job to
introduce him. Now Lord Hoffmann really does need no introduction.
And he really does need no introduction, and I think there are very few people about whom
you could say that. I’m told that fame is when people recognise who you are from your
first name, and I know this will sound astonishingly over-familiar in a public lecture, but for
a lawyer, who else are you talking about when you talk about Lenny? Other than Lord Hoffmann.
So, but more seriously, why such fame? Why has he got such name recognition amongst lawyers?
So if I wear my Company Law hat, I would of course immediately recognise that Lord Hoffmann
has an especially large impact in Company Law, in very many areas, perhaps especially
in shareholder litigation, starting with O’Neil v Phillips, and you keep on going. But then
if I wear my commercial law hat, is there a practising lawyer, indeed is there a student,
whose not alert to the fact that Lord Hoffmann’s restatement of orthodoxy in Investors Compensation,
managed to build a whole new industry in contract interpretation? And then, in Equity, all those
battles with Lord Millett, what fun! And the list goes on. In fact it goes on well
outside my field. So Lord Hoffmann has had a profound effect on human rights and those
difficult cases on terrorism. He has done the same in Intellectual Property Law, in
particular with patents. And thanks to an alert from one of my colleagues today, you
might note that the Supreme Court in their decision today in Michael v Chief Constable
of the South Wales Police Force has delivered a decision which I’m told presents the most
stunning re-affirmation of Lord Hoffmann’s basic and rather restrictive approach to determining
whether a public body would be held liable in negligence for a failure to save someone
from harm. So, I think he’s well known because his breadth
just sweeps across so many areas of law, and he has had such a profound impact on some
of the way we think about some of the fundamental issues.
But when you introduce people you are supposed to start at the beginning. Lord Hoffman was
born in Cape Town, educated at the University of Cape Town, and then attended that other
place, Queen’s College Oxford, as a Rhodes Scholar. He studied for the BCL degree and
won the Vinerian Scholarship. For twelve years after that he was a fellow at the University
College in Oxford, where he is now an honorary fellow, and during that time he was also called
to the Bar at Gray’s Inn, and quickly became one of the most sought-after, and I understand
one of the most highly priced, barristers of his generation. He was made a QC in 1977,
and a Judge shortly thereafter. He was a Law Lord from 1995 to 2009, and still serves as
a non-permanent Judge of the Court of Final Appeal of Hong Kong.
When he retired as a Law Lord, he didn’t stop thinking like a lawyer. He immediately joined
a Centre for Commercial Law Studies at Queen Mary as an Honorary Professor of Intellectual
Property Law. But then you should say something more personal,
shouldn’t you? And anyone who has watched any TV programmes on the House of Lords will
know that Lord Hoffmann has another side. He’s a cyclist. He got to work in the House
of Lords on his bike every day. That’s not all though. He’s probably cycled more miles
in Europe – more kilometres in Europe – than any anyone who is not a professional cyclist.
He’s also, so I’m given to understand, a voracious reader of novels. So he puts the rest of us
to shame who can barely manage our reading workload.
But enough, I think you get a flavour of the man, so without more ado I will handover to
Lord Hoffmann. His topic is ‘Constitutionalism and Private Law’. Even the originality of
the title and the unlikely pairing of those ideas suggests we’re in for a treat, and no
doubt for a few surprises. So Lord Hoffmann will speak for about 45 or 50 minutes, and
then he’s happy to take questions. So, over to you Lord Hoffmann.
Well, it’s a great pleasure and a privilege to be in Cambridge. This morning I was giving
a class in Patent Law in Oxford, where I’m seen more often. But, to be here is really
an honour. The advertised title of this lecture does
not give much away, so I shall say now that what I intend to discuss is what judges think
about when they are asked to change the common law. Many people think that it is not the
business of judges to change the law at all. One of the main purposes of the Code Napoleon
was to ensure that the whole of the civil law was written down in clear terms and confine
judges to applying the Code to the facts of the case. That is still the constitutional
theory in France, although experience has shown that it is not quite so simple. In England
there was a fiction that all the rules of common law had existed since the coronation
of Richard I in 1189 and that judges merely declared what it had always been, even if
this involved correcting an error by earlier judges. As a fiction it still exists and may
be said to serve a useful purpose. It supports the undoubted fact that changes in the law
by judicial decision, unlike most statutes, operate retrospectively. That is no fiction.
When the Supreme Court says that the law, which was previously thought to be entirely
in favour of the respondent, is actually in favour of the appellant, the respondent loses
the appeal, even though the facts of the case happened, by definition, before the Supreme
Court changed the law. Writers and judges have occasionally speculated about the possibility
of the Supreme Court assuming power to change the law only with prospective effect, it would
involve judges moving outside their normal business of deciding disputes between parties.
They would be saying to the successful party: ‘It is very public-spirited of you to have
brought this matter to our attention and we quite agree that the existing law is extremely
unjust, so we are going to change the law for the benefit of other people in the future,
but I am afraid you are going to lose because the unjust law was in force when you entered
into this transaction.’ But the fact that a change in the law will operate retrospectively
is one of the matters which judges take into account in deciding whether it should be changed.
Even if they think a decision of their predecessors was wrong, the effect of a change on people
who entered into transactions on the assumption that it was right may be so unfair that it
would be better to leave things as they are. The judges can leave a rule of common law
unchanged even though they think it is wrong because judicial decisions are not the only
way in which the common law can be changed. It can be changed by Act of Parliament and
there are often reasons, like the retrospectivity of judicial decisions laying down the common
law, which may make it more desirable that Parliament should do so. That is obvious and
has been recognised by judges for a long time. But there are other reasons which are not
so well recognised, arising sometimes out of conceptual differences between rules of
statute and of common law and sometimes out of constitutional arguments based upon the
principle of the separation of powers. It is those which I propose to discuss tonight.
One of the most striking recent decisions changing a rule of common law was the decision
of the House of Lords in Kleinwort Benson v Lincoln City Council. The common law allows
a person who has mistakenly paid money that he did not owe to claim that it should be
repaid to him. It is unfair that the recipient should be allowed to take advantage of his
mistake. However, in the early nineteenth century it was decided that money could be
recovered only if it was paid under a mistake of fact. It could not be recovered if the
mistake was one of law. There was no logic in this distinction: whether the mistake was
one of fact or law, the person who paid did so because he thought the money was owing
when actually it was not. It was equally unfair that the recipient should be able to keep
money that was not due to him. The Law Commission recommended legislation to abolish the distinction.
However, it was treated as a rule of common law for nearly 200 years until the House of
Lords changed the law in the Kleinwort Benson case.
Why did the House of Lords feel able to say that a rule which had been assumed to be the
common law for so long was wrong and to change it with retrospective effect? Why did they
not leave it to Parliament to do for future cases? First, because the common law trades
in principles rather than arbitrary rules. The distinction between mistakes of fact and
law looked entirely unprincipled. Secondly, because there was no question of reliance.
Recipients of money that is not owing to them do not rely upon the fact that it was paid
under a mistake of law rather than fact. Of course they may share the mistaken view that
the money is due and go ahead and spend it, but that would be possible whatever the mistake
was about. There are special defences for people who have changed their position on
the basis of a mistaken assumption that the money was actually due to them, but they do
not depend upon the nature of the mistake. So the House of Lords thought it would be
unjust to leave parties who had in the past paid under a mistake of law without any remedy.
I now want to contrast the Kleinwort Benson case with another cases decided in the House
of Lords four years later: Fairchild v Glenhaven Funeral Services Ltd. This was the case about
victims of mesothelioma. This is a rare but fatal cancer, caused almost invariably by
ingestion of asbestos fibres. It has an incubation period of several decades so that the victims
tend to be people who worked with asbestos when its dangers were insufficiently appreciated.
In 2012 about 2,500 people died from mesothelioma, about 1.5% of cancer deaths in that year.
In many cases, their employers years earlier had been negligent in not taking precautions
against their coming into contact with asbestos. At common law, however, it is not enough to
prove that someone was negligent. You have to prove on a balance of probability that
his negligence caused your injury. But the problem about mesothelioma was that there
is no way of proving which asbestos fibres caused the disease. If you worked with asbestos
for several employer over the years, as most building and shipyard workers did, it could
have been caused by any of them. So the Court of Appeal decided that it was very unfortunate
but none of the employers could be made liable. The House of Lords decided that this was a
terrible injustice which they had to put right. So they created an exception in which it was
unnecessary to prove that the defendant caused the injury. It was sufficient to prove that
he substantially increased the chances of it happening. Statistically, you were more
likely to get the disease if you worked with asbestos for ten years than if you only did
so for three. So an employer who exposed you to asbestos for a substantial time increased
the chances of your injury and the House of Lords held that this was enough to make him
liable. In principle, this was a revolutionary judgment.
The common law of negligence had always demanded proof that the negligence had caused the injury.
It operated a binary system: you had either caused it or you had not. If it was more than
50% likely that you had caused it, you were taken definitely to have done so. If it was
50% or less, you had definitely not done so. You recovered full compensation or none at
all. It is a crude but simple system. Why did the House of Lords think it could change
the law? The reason, of course, was that Fairchild
was a hard case. They say that hard cases make bad law. The great difference between
Kleinwort Benson and Fairchild was that in Kleinwort Benson one could say that, as a
matter of principle, the previous decisions were wrong. It made no sense in the context
of recovering money paid by mistake to distinguish between errors of fact and errors of law.
But the House of Lords in Fairchild did not claim to be correcting a rule that was wrong
in principle. The general principle that you had to prove causation on a balance of probability
was left intact. So the judges had to find some principle upon which they were justified
in creating an exception. But they were unable to do so. Should one say that the exception
should apply in all cases in which it was impossible to prove which of two or more possible
causes was responsible? That would have been far too wide. It would have destroyed the
general rule altogether. There are many cases of medical negligence in which it is impossible
to prove that, but for some negligent act on the part of the doctor, the patient would
have got better, or would not have got worse. If it was enough to show that the doctor substantially
reduced the chances of getting better, the £1 billion or so paid by the NHS last year
for clinical negligence claims would be considerably increased.
The best we could do, and this includes myself, was to say that the exception applied when
the injury was caused by the same agency. In Fairchild, for example, it was definitely
caused by asbestos and only question was: whose asbestos? It would not apply when, for
example, the cause of the disease was either asbestos or smoking. But this was an unprincipled
decision which was almost comically exposed in a later case in the Court of Appeal when
the claimant’s cancer could have been caused by smoking or by inhalation of chemicals from
dyestuffs with which he had been working. The expert evidence showed that the chemical
substance in the dyes which might have caused the disease was the same as that in the cigarettes.
This was an arbitrary distinction of ever there was one.
I said in discussing Kleinwort Benson that the common law trades in principles and not
in arbitrary rules. Kleinwort Benson was right because it removed an arbitrary distinction
and restored the general principle. Fairchild was wrong because it introduced an arbitrary
distinction into what had been a clear principle. The judges recognised that they could not
limit the exception to mesothelioma. That would have looked blatantly arbitrary. So
they tried to invent a distinction which looked more like a principle but which came apart
in their hands. Arbitrary distinctions in the law are often
necessary on pragmatic grounds. The voting age is 18; you can’t vote when you are 17
years and 11 months, even though you may have a better knowledge of politics than someone
who is 19. It would not be practical to test everyone’s qualifications. Parliament can
do this and does it all the time. But judges cannot. I think that in Fairchild we assumed
we alone could do something to put right an injustice to mesothelioma victims. We did
not consider that Parliament might intervene. But what happened afterwards is interesting.
The Fairchild case decided that if the negligence of two or more employers had each substantially
increased the chances of a worker contracting mesothelioma, each was liable. It did not
decide for how much. Were they each liable for the whole of the damages, so that if one
was insolvent, the other had to pay the whole? Or were they each liable in proportion to
their contribution to the chances of his getting the disease? In a case two years after Fairchild,
the House of Lords decided that each was liable for a proportion but not for the whole. That
meant that if one employer was insolvent, the worker or his estate could not recover
his proportion of the damage. This decision caused immediate protests from
the trade unions. The Government was sympathetic and within three weeks an Act of Parliament
had been passed to reverse it. The Act made all the employers liable jointly and severally
for the whole damage, did so retrospectively and limited its application to mesothelioma.
This was the kind of thing which Parliament could do but judges could not. I think that
if we had realised when we decided Fairchild that Parliament would be willing to pounce
upon the problem in the way it later did, we would have left well alone. We would have
said that it was a hard case but that the common law could not be changed without damage
to an important general principle and the creation of uncertainty about how far the
new exception extended. And we might have recommended that Parliament deal with the
matter pragmatically by legislating specifically for mesothelioma and, to be fair to the claimants
in our case, doing so retrospectively. The Fairchild case illustrates the perils
of making changes in the common law which cannot be justified on principle. But there
may be other, more constitutional, reasons why judges should hold back. Sometimes it
will be because Parliament has already created a system of rules which are a more practical
answer to the problem than anything which the judges could devise. Sometimes it will
be that a proposed change in the law, for example, to create a new head of liability,
will involve public expenditure and that it is more appropriate that such expenditure
should be authorised by democratically elected organs of government than by judges. The Fairchild
rule itself opened the way to a case which raised an issue of this kind. Gregg v Scott
was a case in which a doctor had been negligent in telling a patient that a lump under his
arm was benign instead of referring him to hospital to have it checked. In fact it was
found a year later to be cancerous and the judge found, not surprisingly, that having
cancer had reduced the patient’s expectation of life. The question, however, was whether
it would have made any difference if it had been diagnosed earlier. The judge found on
a balance of probability that it had made no difference. There was, he said, after looking
at epidemiological statistics, a 40% chance that it would have made a difference and under
the law’s binary system, that meant it had to be taken as having made no difference.
In the House of Lords it was submitted that we ought to extend a version of the Fairchild
principle to all cases of medical negligence and award the patient 40% of the damages he
would have recovered if he had been wholly successful. This would have been a huge change
in the common law and, furthermore, would have enormously increased the liabilities
of the National Health Service. If such a change in the law was desirable, it should
be made by Parliament and not by judges. Fortunately, by a majority of 3 to 2, the proposed change
in the law was rejected. It was a very close-run thing.
I turn next to those cases in which the courts should not make changes in the common law
because the ground which a change would cover is already occupied, or should be occupied,
by statute. I shall take two examples from the law of nuisance.
The law of nuisance goes back to mediaeval times. It is concerned with a certain species
of what economists call externalities, i.e. either the involuntary imposition of some
of the costs of an activity upon other people or the conferment upon other people of benefits
which they have not paid for. Nuisance is concerned with the first kind of externality
in connection with the use of land. The best example is the great mid-Victorian case of
St Helen’s Smelting Company v Tipping , in which an alkali company in Lancashire polluted
the atmosphere to such an extent that it was actually dumping chemicals upon the surrounding
land. The result was to impose some of the costs of the business on other people. The
House of Lords decided that the law of nuisance allowed the other landowners to claim compensation.
In those days, of course, there was no planning control and the law of nuisance was the only
remedy available to prevent landowners from doing what they liked upon their land.
A comprehensive system of planning control was introduced by the Town and Country Planning
Act 1948 and the 1990 version was in force when Hunter v Canary Wharf Ltd came before
the House of Lords in 1997. The tower of Canary Wharf, clad in stainless steel, interfered
with television reception from the transmitter at Crystal Palace. Many houses in Poplar which
lay in its electro-magnetic shadow could not receive any signal at all. This continued
for three or four years until the construction of a relay transmitter to the north. They
claimed compensation under the law of nuisance, saying that the building had interfered with
the use of their houses. To allow such a claim would have been an extension
of the law. There had never been an action for nuisance if you kept yourself to yourself
and simply constructed a building on your land. A neighbour could not complain that
you had interrupted his view or blocked the flow of air or even darkened his windows,
although there is a rather anomalous rule by which you can acquire a right to light
if your building has been up for more than 20 years. If you cannot complain of interference
with light or view, why should you be entitled to complain of interference with television?
And yet, being deprived of television is in today’s society a serious matter. Why should
it not be regarded as a cost of putting up the building, which should be borne by the
developers hoping to make a profit from letting the office space? That was the argument for
extending the law. So far as I was concerned, at any rate, part
of the reason for not doing so was the existence of planning control. A planning inquiry gives
the planning authority an opportunity to hear the objections of the neighbourhood. It can
require the developer to enter into an agreement under section 106 of the Act to take steps
to prevent inconvenience to others; for example, to pay for the construction of a relay transmitter
before the building is completed. Statutory planning control seems to me a much more effective
mechanism for avoiding such externalities than having individual actions for compensation
brought by hundred of householders in the neighbourhood. In the Canary Wharf case, however,
the difficulty was that Parliament had altogether suspended the application of planning control
to the Isle of Dogs. It was so anxious to regenerate the Docklands that it declared
the area an enterprise zone in which landowners were free from any restriction. They could
build what they liked without having to get planning permission. So the television reception
of the householders of Poplar was sacrificed to the greater good of developing Docklands.
But those special circumstances were not a reason for a change in the common law which
would have to apply where planning control existed. And one must not forget that in addition
to negative externalities like interference with television, there were positive externalities
which conferred upon the householders other benefits which they had not paid for. The
construction of the Docklands Light Railway and other infrastructure projects at public
expense and the consequent revival of the neighbourhood increased the value of their
houses. If the statutory system of planning was a
relevant circumstance which the House of Lords in the Canary Wharf case took into account
in deciding not to extend the law, in the case of Marcic v Thames Water Utilities the
statutory scheme was decisive. Marcic was a case about sewers. Until they were recently
privatised, sewers were a public utility and subject to a statutory scheme. An important
element of that scheme, going back into the 19th century, was that anyone had the right
to connect his premises into a public sewer. From a public health point of view, it was
desirable that he should do. But it gave rise to a problem if so many people emptied their
sewage into the foul sewers that they became overloaded. In time of heavy rain the sewers
would back up and deposit foul sewage in people’s gardens. That was what happened to Mr Marcic,
who had a house in Stanmore. He had to build his own flood defences to keep the sewage
from coming into his house. So he made a claim in nuisance against the sewage company, saying
that the inadequacy of their sewers had interfered with his use of his property.
The company had no control over the quantity of sewage which went into their sewers. So
the complaint was not about anything which the company had done. It was said that, faced
with increasing use, it should have done something positive to enlarge the sewers.
The ancient rule of common law was that liability in nuisance required you to have done some
positive act causing damage to another landowner. You were not liable from simply allowing nature
to take its course. In the last sixty or seventy years, however, that rule has been thought
slightly too restrictive. There are some exceptional cases in which people have been required to
take some action to prevent a dangerous situation on their land, which they had not themselves
created, from spreading to a neighbour. A farmer in Australia was held liable for not
preventing the spread of a fire which had been started by lightning. The National Trust
was liable for not doing something to prevent eroded rocks from tumbling onto the next property.
But these are very unusual forms of liability, particularly because they require the court
to take into account what the particular defendant could have done. The normal rule about liability
for things you do is that there is an single standard of reasonable behaviour for everyone.
If you do not have the resources or skill to meet that standard, you ought not to do
it at all. But that would obviously be unfair when the complaint is that the defendant simply
failed to do something. It needs an inquiry into what he in particular could have done;
what resources he had available. That may not be an easy matter. However, if it is a
difficult question between neighbours, it is a much more difficult question when it
comes to whether a sewage company should have built more or bigger sewers. In order to do
so, they will have to charge the public more. Would it be fair for the householders of Greenwich
to have to pay more for their sewerage to enable more sewers to be constructed in Stanmore?
Because these are complicated questions, Parliament has for more than a hundred years entrusted
them to administrators. Noawadays, if your local sewer is inadequate, you can complain
to the Director-General of Water Services. He will then consider whether something ought
to be done. He will take into account the severity of the problem, how it ranks in priority
compared with other sewers that need to be build or enlarged, what it will cost, whether
that will mean putting up water rates and so on. That is obviously not an exercise a
court could undertake in litigation between two parties. The House of Lords therefore decided that
the question of whether the law of nuisance should be extended to cover Mr Marcic’s case
could not be decided without regard to the existence of statutory regulation. That seemed
to deal with matter much better than anything the common law could achieve.
My last example of the relationship between the roles of the judiciary and the legislature
in changing the law is the extraordinary story of the economic torts, that is to say, torts
which consist of causing the claimant purely financial loss. Until the mid-nineteenth century
they hardly existed. There had been two cases in the seventeenth and eighteenth in which
judges appeared to think that tradesmen had caused loss to rivals by exceeding the bounds
of fair competition: there was a seventeenth century case in which a quarryman at Oxford
made death threats against anyone who traded with a rival and another a century later in
which the master of a ship trading on the west coast of Africa fired a cannon at a canoe
bringing good to sell to a rival ship. But the obscure reports in which these cases were
reported said little about the principle on which they were decided. In Lumley v. Gye
, however, the common law went a great deal further. In this famous case, Mr Lumley, the
manager of Her Majesty’s Theatre, engaged Miss Johanna Wagner, a famous soprano and
Richard Wagner’s niece, to sign Donna Anna in Don Giovanni and a couple of other roles.
Mr Gye, manager of the Covent Garden Theatre, not yet the Royal Opera House, offered her
better terms, so she broke her contract and did not appear. The Court of Queen’s Bench
decided by a majority that inducing a party to break a contract was a tort. The only precedent
for such a claim was the mediaeval action for poaching a servant, which was based partly
on the theory that one had a proprietary interest in one’s servant and partly upon the economic
needs of landowners arising out of the acute shortage caused by the Black Death. As in
the case of mediaeval labourers, the judges in Lumley v Gye felt that it went beyond the
bounds of fair competition to poach a famous opera singer who had already signed up for
a rival. What was the general common law principle
which the case represented? At the time, it was not easy to say. Mr Willes QC, who had
been on the losing side, maintained for the rest of his life that the case had been wrongly
decided. The judges in Lumley v Gye could not have declared that the Statute of Labourers
1351 was being extended to opera singers or even to people offering cultural services
to members of the middle classes like themselves. Parliament could have done this, but not the
courts in their interpretation of the common law.
Did it express a principle of unfair competition? It looks as though that was what the judges
had in mind. You may offer customers a better deal than your competitors, but not when you
know that they have already signed up to a binding contract with someone else. That is
going too far. But the common law, unlike for example German law , knows no general
theory of unfair competition of which this could be a species. The common law has a few
specific principles of unfair competition, like the tort of passing off: you may not
deceive the public by pretending that your goods are those of a competitor. This is safe
ground for the common law, deception being something that judges are used to dealing
with. It does not raise any difficult questions of economics or public interest. I suppose
the same may be said about the ancient cases about violence against a rival’s customers.
Presumably the judges in Lumley v Gye thought that inducing a breach of contract with a
competitor was crossing a bright line which would be easy for judges for the judges to
police. But I doubt they thought very hard about it; the judgments contain some general
statements that there might be cases in which inducing a breach of contract could be justified
but no illustrations of what they might be. But the Court simply fastened upon the fact
that any breach of contract was an unlawful act, a violation of the rule that people should
perform their bargains, and that Mr Gye had deliberately induced such a breach to profit
at the expense of his rival. For many years Lumley v Gye remained a curiosity,
a controversial anomaly. No one was quite sure how far it went. Thirty years later,
when the Court of Appeal in Bowen v Hall decided by a majority to approve it, Lord Coleridge
said that it had never previously been applied. What made the rule in Lumley v Gye explode
into public life was the rise of the trade union movement, which had led a shadowy existence
of semi-illegality until Disraeli’s Conspiracy and Protection of Property Act 1875. The ultimate
bargaining weapon of a nineteenth century trade union was a strike, either against the
employer with whom they were in dispute or against a customer or supplier whom they wanted
to compel to put pressure upon a recalcitrant employer. A strike often involved breaches
of the strikers’ contracts of employment, although not always, as the plaintiff in Allen
v Flood discovered when he lost his case in the House of Lords on what must have seemed
to most people the highly technical point that his fellow employees who threatened to
strike unless he was sacked had no contracts of employment. They just signed on from day
to day. The question which arose in the last quarter of the nineteenth century was whether
the courts would transfer the rule in Lumley v Gye from the context of competing traders
to that of industrial relations, where the economic considerations were entirely different.
Temperton v Russell in 1893 was the crucial case in which Lord Esher MR enthusiastically
embraced Lumley v Gye as a weapon against the trade unions. His judgment makes no secret
of his political views and it put the courts and the unions on a collision course in a
series of highly politicised cases in the last decade of the nineteenth century and
the early years of the twentieth. The difficulty was that although inducing
a breach of contract might be a bright line (although perhaps not always a very logical
one) in cases of competition between traders, which would seldom raise questions of justification,
such questions were very much to the fore in cases about industrial relations. You could
not regulate strikes by law without having a political and economic view about the circumstances
in which a strike would be justified. Not only were judges unqualified to make such
decisions; the questions were so politically charged that it was constitutionally inappropriate
that they should do so. In the Mogul Steamship case , decided a year before Temperton v Russell,
the House of Lords emphatically declared that it was incapable of laying down a general
principle of unfair competition between traders. The shipowner defendants in the Mogul case
had done everything which nowadays would bring down upon them huge fines from the competition
authority. They had formed a cartel, lowered prices to drive out competition and then raised
them again and so forth. The House of Lords said this was perfectly lawful. That was entirely
reasonable. Their view was that it was for Parliament, rather than the common law, to
create a system for dealing with restrictive practices and unfair competition, as it eventually
did in the Restrictive Trade Practices Act 1956.
In the case of industrial relations, however, the courts plunged into the fray. They refused
to engage in economic questions of justification. In the South Wales Miners case in 1905, the
union attempted to justify a strike by saying that it was in the legitimate interests of
their members, who were being paid miserable wages. The House of Lords would have none
of it. Liability depended upon breach of contract and nothing but the breach of contract. The
result was that apart from cases in which judges could apply moral views which did not
involve questions of politics or economics, like the man who persuaded chorus girls to
desert in breach of contract to rescue them from prostitution , the question of justification
disappeared from view. If ever there was an example of the law of
unintended consequences, it was the decision of the Court of Queen’s Bench to give Mr Lumley
a remedy against Mr Gye. The judges who thought there should be a remedy because Mr Gye had
not behaved like a gentleman could not have foreseen that fifty years later it would form
the basis for a political storm which did much to give rise to the growth of the Labour
Party and to bring down the government in the election of 1905, after which the unions
were given protection by the Trade Disputes Act 1906.
The political pressures under which the law evolved in the late nineteenth century also
produced illogicalities. For example, was the rule confined to inducing breach of contract
or was that just one example of a wider tort of interfering with economic relations? In
Temperton v Russell Lord Esher, in an expansive mood, said he could see no difference between
inducing the target employer’s suppliers to break their contracts and inducing them not
to enter into such contracts. In both cases the purpose of the strike is to use action
against the supplier to put economic pressure upon the employer. It is hard not to sympathise
with Lord Esher, because he was obviously right. In the opera world, it may make sense
to treat the signing of the contract as the line you may not cross. Once you know that
Miss Wagner is under contract, you may not offer her a larger fee or a better dressing
room. It is hard to think of what would be regarded as justification for doing so. In
the world of labour relations, however, the question of whether there is justification
for applying economic pressure is more important than whether there was a contract or not.
What Lord Esher did not recognise was that his sound instinct about the real issue did
not necessarily lead to the conclusion that the trade unionists should be liable whether
there was a contract or not. It might be that they should not be liable in either case and
whether or not they should was essentially a political question for Parliament to decide.
However, a few years later a majority in the House of Lords in Allen v Flood , who did
not share Lord Esher’s political views, saw insistence on a breach of contract as a way
of cutting back the application of Lumley v Gye to trade union disputes. So it did,
but it left the law in a highly illogical state.
The Trade Disputes Act 1906 drew the teeth of Lumley v Gye in the area of industrial
relations. The turbulent labour relations of the sixties and seventies gave rise to
the judicial invention of some new economic torts, namely intimidation and causing loss
by unlawful means, which were a muted reprise of the events of the late nineteenth and early
twentieth centuries. But the role of the common law in this area was entirely extinguished
by Mrs Thatcher’s trade union legislation in the early eighties. Since then, no political
party has shown any appetite for allowing the possibility of further judge-made law.
Unfair competition, as the House of Lords had recognised in the Mogul case more than
a century ago, is also not an area suitable for judge-made law. It also involves questions
of policy and economics which are more appropriately decided by Parliament or by statutory machinery.
When the scope of the economic torts was considered by the House of Lords in OBG v Allan in 2008,
the general approach was to restrict their scope as far as respect for precedent would
allow. So inducing breach of contract is now, perhaps uniquely in the law of tort, a tort
of specific intent; you must intend a specific consequence, namely the breach of a contract
of which you have knowledge. It does not matter that you were careless or stupid in being
unaware there was a contact. Furthermore, there must have been an actual breach; cases
which created liability for interference with the performance of a contract, not amounting
to a breach, were overruled. The tort of causing loss by unlawful means was pruned back to
its roots in the old cases about death threats to customers: you must have done something
unlawful to a third party which affected his ability to deal with the claimant. In effect
the House recognised that in Lumley v Gye the judges had made a mistake, by entering
a field better left to Parliament. In this lecture I have dwelt upon the cases
in which the courts have unwisely trespassed upon ground better left to Parliament. But
the opposite is sometimes also true. The common law consists of general principles of great
flexibility which have been applied over centuries in many situations recorded in the Law Reports.
In some cases, the introduction of legislation covering the same ground is like a bull in
a china shop. Consider, for example, the Social Action, Responsibility and Heroism Bill, presently
about to return to the House of Commons. It requires that in an action for negligence,
the court must have regard to whether the defendant was acting for the benefit of society,
demonstrated a generally responsible attitude towards protecting the safety and interests
of others, or was acting heroically by intervening in an emergency to assist an individual in
danger. All these are things that, as a matter of principle, any court would already take
into account. So what are we to make of the Act? Does it change the law? What was the
mischief, in the traditional phrase, which it was meant to correct? It seems to have
been declaratory: a Parliamentary statement to reassure readers of the Daily Mail that
judges would, contrary to their supposed previous practice, have regard to such matters. The
trouble with such political interventions in the common law is that they run the risk
of causing confusion by being taken seriously. The adaptation of the law to the needs of
justice and to changing conditions is a partnership between the judiciary and the legislature,
which requires some sensitivity on the part of both branches of government; a recognition
by the one that there are areas in which change, however desirable, is best left to the other.
W.S. Gilbert said of the role of the House of Lords in defeating Napoleon that they,
“did nothing in particular, and did it very well”. And that is something I can sometimes
recommend. Sometimes to the Courts, and sometimes to Parliament.

2 thoughts on “‘Constitutionalism and Private Law’: 2015 Cambridge Freshfields Lecture

  • lawful rebel Post author

    Hoffman is not to be trusted. At the 10.00 minute mark he claims Judges can change the common law. He disregards the Coronation and Judicial Oaths.

    In the Pincochet case he failed to recuse himself as a board member of Amnesty International when that organisation was the plaintiff in a case he was dealing with:

    https://publications.parliament.uk/pa/ld199899/ldjudgmt/jd990115/pino01.htm

    No doubt he is bound by the Kol Nidre Oath at the 4.99 mark:

    https://www.youtube.com/watch?v=zDNSqghh8Ic

  • Raggedy daCat Post author

    5:46 is when introduction is over.

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