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Wednesday, 20 July 2011

"... the greatest piece of judicial law reform in my time ..."

Published in the New Law Journal, Vol 161, 17 June 2011, p 854  lawbites
Lord Denning is perhaps the most famous twentieth century English judge. His fame derives from several sources: partly from the number of high profile cases on which he sat; partly from his preference for justice as he saw it over precedent; and partly due to his inquiry into the Profumo affair, which, he later recalled, produced his one and only best seller. (It was also known as the "raciest Blue Book ever", though presumably not in the face of much competition.)

Perhaps uniquely amongst common law judges, Denning is also famous because of his judgment-writing style. It certainly endeared him to generations of law students, though not all law teachers: a curmudgeonly sort at my alma mater used to sneer at Denning's "short sentences and simplistic reasoning".

Still, Denning's judgments could never be accused of lacking clarity, and his unarguably short sentences could be crafted with such skill that his judgments on occasion attained the status of works of literature, as any reader of Miller v Jackson [1977] 3 All ER 338 will attest.

Born in 1899, and a veteran of the Great War, Denning displayed the values of his generation more than once, but he could also be forward-looking, perhaps most notably when ruling on the right of a deserted wife to remain in the matrimonial home. His judgments in the fields of property and contract were less well known publicly, but equally controversial in the legal profession: another professor of mine once suggested Denning “never met a plaintiff he didn’t like” (presumably Mrs Miller excepted).

Somewhat surprisingly, however, what Denning called "the greatest piece of judicial law reform in my time" did not arise from casting aside the patriarchal shackles of outdated social mores. It did not even concern substantive law. Instead, it was the creation of the pre-trial remedy of the Mareva injunction, by which assets in the jurisdiction can be frozen before trial in order to prevent unscrupulous defendants from removing them and thereby rendering any litigation fruitless.

The origins of the remedy are found in Nippon Yusen Kaisha v Karageorgis and anor [1975] 3 All ER 282, a case heard a month before Mareva.

Recently Lord Neuberger complained, with some justification, about the length of modern judgments. He would certainly have had a point in comparison with the Nippon Yusen Kaisha case – the lead judgment was all of four paragraphs long. Denning observed that it “has never been the practice of the English courts to seize assets of a defendant in advance of judgment, or to restrain the disposal of them. ... We know, of course, that the practice on the continent of Europe is different.” He then opined that it was time to revise that practice, and went on to grant the order, pointing out that if the defendants had grounds to object they could always apply to discharge it.

It was considered afterwards that the judgment might be defective, since the court had not been referred to Lister v Stubbs [1886–90] All ER Rep 797, where it had been stated that there was no jurisdiction to grant such an injunction. Thus, on 23 June 1975, Mareva Compania Naviera SA applied for similar relief to Nippon Yusen Kaisha, and addressed the Lister v Stubbs point directly.

On that occasion the judgment ran to all of three pages. Denning dealt with the Lister point breezily. He referred to s 45 of the Supreme Court of Judicature (Consolidation) Act 1925, which provided that an injunction could be granted “in all cases in which it shall appear to the Court to be just or convenient …”, and pointed out that its predecessor section had been given a very wide interpretation in Beddow v Beddow (1878) 9 Ch D 89. As it was just and reasonable to grant the injunction, Denning did so.

Roskill LJ agreed that the remedy was justified. As to the legal novelty, he pointed out that the charterers could always apply to the court to discharge the injunction, and referred almost sheepishly to the terms of the charter as providing a means of distinguishing Lister v Stubbs “if necessary”. Ormrod LJ concurred but declined to write a separate judgment as the application was ex parte.

It has to be said that the grounds for distinguishing Lister seem rather shaky. But the commercial justifications were unanswerable, and the point was never appealed further. Instead Mareva injunctions became standard practice, and a few years later Parliament codified the practice in the Supreme Court Act 1981 (see Paul Lowenstein QC “As if by a side-wind ...” in Cases that Changed Our Lives, Lexisnexis 2010). The jurisdiction was subsequently extended to include orders of worldwide application, and even cases where there is no substantive claim in England. Renamed “freezing order” in CPR newspeak, the remedy continues to form a substantial part of the business of the Commercial Court.

Denning, aged 75 at the time, took advantage of the absence of any mandatory retirement date and continued to sit until the early 1980s. He died in March 1999 aged 100.

Counsel for Mareva, Bernard Rix, is now Rix LJ and a resident of Denning’s old haunt of the Court of Appeal. One imagines that the number of times he has had occasion to recall that day in June 1975 over the course of a long and distinguished career in commercial litigation must be very considerable indeed.

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