By declaring itself free to depart from its own previous decisions, the House of Lords unbound itself from the time-honored doctrine of judicial precedent: capable of rendering judgment on the basis of its own convictions – “when it appears right to do so”-even without resorting to the dicta of previous rulings. But the declaration does not demand absolute departure from precedent.
Under the Practice Statement (1996), the House of Lords may disregard previous decisions when “too rigid adherence to precedent may lead to injustice in a particular case, or restrict the proper development of the law.” Past decisions, not to be disturbed, are to be treated as formally binding. Price (2002) wrote: “Courts are not strictly bound to follow prior precedent, but at a minimum they must take note of the prior determination and explain any choice to decide the matter differently.”The Practice Statement(1966) admonishes their Lordships “to bear in mind the danger of disturbing retrospectively the basis on which contracts, settlements of property, and fiscal arrangements have been entered into, and also the need for certainty as to the criminal law.
” The declaration has made possible the evolution of the law as it adapts and becomes more attuned to the changes in our society and enables it to keep in touch with the ever changing milieu. By declaring its departure from the old Rule, the House of Lords manifested its cognizance of the need for law to evolve and develop, free of obsolete principles, in a manner that would best serve the ends of justice.The Practice Statement does not affect the value of precedent in lower courts; all other courts that recognize the House of Lords as the court of last resort are still bound by it. (Price, 2002).
Prior to the declaration, courts made law upon their decisions on cases litigated before them to which other tribunals, deciding future cases, must necessarily conform. Lord Halsbury, in London Tramways Co v London County Council (1898) stated : “…a decision of this House once given upon a point of law is conclusive upon this House afterwards, and that it is impossible to raise that question again as if it (had never been decided) and could be reargued, and so the House be asked to reverse its own decision.” Its rationale was that “decisions of the highest appeals court should be final in the public interest, creating certainty and discouraging unnecessary litigation, despite the possibility of individual hardship”. Criticized for its inflexibility, the old rule nevertheless reinforced the dictum that law should be construed in accordance with well-settled principles rather than untested theories.The making of laws through stare decisis had resulted in a perceived fairness, certainty and consistency in the manner by which our courts act on the actions brought before them. It filled gaps where the written law failed to provide for all possible circumstances in which it may be challenged, or where it failed to define its limits.
But too rigid adherence to the doctrine of judicial precedent has been found, at times, to result in injustice, and restrict the development of the law.In Conway v. Miller, (1968, the House of Lords departed from the precedent laid down in Duncan v Cammel Laird & Co. Ltd (1942) in order to prevent injustice to the appellant. The plaintiff was a constable who was dismissed from the service on account of certain documents used against him by a superior officer.The plaintiff … began an action for malicious prosecution against his former superintendent. In the course of discovery, the defendant disclosed a list of documents in his possession or power, admittedly relevant to the plaintiff’s action, which included four reports made by him about the plaintiff during his period of probation, and a report by him to his chief constable for transmission to the Director of Public Prosecutions in connection with the prosecution of the plaintiff on the criminal charge, on which he was acquitted, and on which his civil action was based.
(Conway, 1968).After his dismissal, the plaintiff charged the defendant with malicious prosecution. At the trial, he asked for the production of the documents that were used against him, but the Secretary of State for Home affairs, invoking Crown privilege, objected on the ground that the production of such class of documents would be injurious to the public interest. The House of Lords held that it had the power “to overrule a ministerial objection in the interest of justice, to look at the document in question regardless of its class or contents.” (Conway, 1968) The court stated: “Justice should be pursued because it is justice. … A negation of justice is a matter so contrary to principle that only the clearest law expressed in the most positive terms should permit it.
”The Conway decision was a departure from the precedent set by Duncan v Cammel Laird ; Co. Ltd., where the appellants asked for the production of certain documents against the objection of the First Lord of the Admiralty who claimed that disclosure would be prejudicial to the public interest. The House of Lords sustained the objection. By virtue thereof, a precedent was laid: the court cannot order the production of or look into the contents of a class of documents upon the manifestation of an officer of the Crown or head of a government department that to do so would be prejudicial to the public interest, such objection to be treated as conclusive upon the court.In Conway, the documents in question were central to the determination of the issues before the court, and to deny their production for scrutiny would have deprived the appellant of the opportunity to prove his case. The House of Lords stated: “Unless the detriment to the public interest threatened by production is so great that no other consideration should prevail, the court must weigh the interests of justice against the possible harm to the public interest.
” (Conway, 1968). Had the House of Lords adhered strictly to the Duncan precedent, a negation of justice would have resulted.The case of Regalian Properties plc v London Dockland Development Corporation (1995) arose from a proposed contract between the parties where the plaintiffs sought to recover damages by way of restitution from the defendant for fees they had paid to third parties in respect of the contract.The defendant corporation entered into negotiations with the plaintiffs, who were engaged in the business of property development, for the regeneration of the site of London’s former docks. The defendant sought tenders from developers for the joint development of four Hermitage sites, on the condition that the developer would take a building licence from the defendant subject to an obligation to complete the development within a fixed time, with an obligation on the defendant to transfer the freehold of the relevant parts of the site to purchasers of residential units to be built on it. The developer would pay a sum for the grant of the licence, which would include a provision for profit-sharing.
The defendant accepted plaintiff’s bid through a letter which was marked “subject to contract.” It informed the plaintiff that his offer for the site was accepted subject to : (1) contract, (2) the site valuers’ certificate of market value, and (3) scheme and the obtaining of the detailed planning consent. The plaintiffs incurred expenses in fees paid to various professional firms in respect of the proposed development and in preparation for the proposed contract, which was, however, not concluded. The expenses were specifically for satisfying certain requirements for the grant of the licence which was a condition for obtaining the building lease. The timetable for the development incurred delays, added costs, and other problems.
The development did not materialize and the plaintiffs brought an action for reimbursement of their expenses. (Regalian, 1995).At issue in this case is whether a party to a proposed contract who incurs expense that benefits the other party, the contract failing to materialize without his fault, may recover from the other the wasted costs.The ratio decidendi of the Regalian case is stated thus:Where parties entered into negotiations with the intention of concluding a contract but on express terms that each party was free to withdraw from the negotiations at any time, it was clear that, pending the conclusion of a binding contract, any costs incurred by one of the parties in preparation for the intended contract would be incurred at his own risk in the sense that he would have no recompense for those costs if no contract resulted.
”(Regalian, 1995).The rationale for the decision in Regalian was that there was no contract; the parties were on express terms that they were free to withdraw from the negotiations at any time. Likewise, it was held that“pending the conclusion of a binding contract, any costs incurred by one of the parties in preparation for the intended contract would be incurred at his own risk in the sense that he would have no recompense for those costs if no contract resulted… if no contract was concluded any resultant loss should lie where it fell. Moreover, the costs which the plaintiffs sought to recover were incurred not by way of accelerated performance of the anticipated contract at the defendant’s request, but to enable them to obtain and then perform the contract, which in no way resulted in any benefit to the defendant.
..”(Regalian, 1995).In William Lacey (Hounslow) v Davis, (1957) the defendant obtained tenders from builders, who included the plaintiffs, for the rebuilding of premises destroyed during the war. Having submitted the lowest bid, the plaintiffs were led to believe they would receive the contract. Upon the request of the defendant’s agents, the plaintiffs prepared work estimates and rendered other services for the benefit of the defendant. However, the defendant sold the premises instead of rebuilding them.
Come now the plaintiffs claiming for damages for breach of contract or, as an alternative claim, for remuneration upon the basis of quantum meruit (as much as he deserves).The issue was whether or not a party who renders services, which are outside the work which a builder normally performs gratuitously when invited to tender for the erection of a building, and incurs expenses to the benefit of the other party in expectation of entering into a contract, which fails to materialize not due to his fault, may recover from the defendant, either by damages for breach or upon the principle of quantum meruit.It was held that no valid contract existed between the parties. With regard to the issue of remuneration based on quantum meruit, the court held that there was “an implied promise on the part of the defendant to pay a reasonable sum to the plaintiffs for the services rendered by them …because the proper inference from the facts was that the work was done under a mutual belief and understanding that the building was being reconstructed and that the plaintiffs were obtaining the contract.
” (Lacey, 1957). Further, the court held that the plaintiffs were entitled to remuneration on the basis of the widened scope of quantum meruit, founded on the basis of obligations arising ex contractu (quasi contracts).Barry J who delivered the opinion of the court in the William Lacey case saw no valid distinction between work performed in accordance with the terms of a non-existent contract and that performed to be paid out of the proceeds of a contract yet to be made. The work so performed was not intended to be gratuitous, it was requested by the defendant, and the defendant benefited of it. In this case, it was clear that “the law implied an obligation…to pay a reasonable price for the services which had been obtained.” (Lacey, 1957).
In Marston Construction Co Ltd v Kigass Ltd (1990), the defendant wanted to build a replacement factory. He invited the plaintiff to tender for the design and build contract. The two had a meeting where it was made clear that no contract would be awarded until the defendant had obtained insurance money to cover the project. Both parties believed a contract was forthcoming and that the insurance company would pay. The plaintiff incurred expenses in preparing the tender and other preparatory works The defendant knew that no preparatory works would be commenced before the contract was signed but no assurance was given that he would meet the plaintiff’s costs incurred before the contract signing. The insurance money did not come and no contract was signed between the parties.At issue in this case is whether or not the plaintiff can recover the preparatory costs on the basis of the implied request from the defendant.
It was held that, because of the belief that the plaintiff would have to commence preparatory works before the signing of the contract, there was an implied request on the part of the defendant for the plaintiff to produce the preparatory works, which the latter carried out, upon the contemplation that the work would be paid out of the contract sum. The work of the plaintiff benefited the defendant, giving the latter realisable benefits in the form of designs, etc. The defendant did not have to show that the defendant had actually received a realised benefit, merely a realisable one. In relation both to the implied request and a further express request to carry out design works, the plaintiff could recover a reasonable sum where the defendant had obtained the benefit of the work.Judge Bowsher (1990), who decided Marston, noted that the facts therein, “although different in important respects, are similar to the facts in William Lacey v Davis. Also present were: an implied request to do the work; a contemplation that the work would be paid out of the contemplated contract; belief by both parties that the contract was about to be made despite a very clear condition still to be met by a third party (the payment of insurance money); and that the defendant (although denied by that party) benefited from the work. In William Lacey, there was an express request of the defendant (through his agents) to the plaintiff for him to prepare cost estimates to obtain the necessary license and other documents to enable the defendant to negotiate with the War Damage Commission for the payment of his claims under the War Damage Act.
The work performed by Lacey was “for some extraneous or collateral purpose”(Lacey, 1957); that rendered by Marston consisted of substantial preparation works, the costs of which would, if a contract had materialized, have been included in the contract price. In Marston, although both parties believed that a contract was to be entered into by them, and that insurance money was forthcoming, the defendant gave no assurance to the plaintiff that he would pay the costs of the works. The court allowed restitution for Lacey on the basis of quantum meruit. In the case of Marston, restitution was ordered on the basis of an implied promise on the part of the defendant to pay for the services of the plaintiff.In British Steel Corporation v Cleveland Bridge (1984) the defendant contended that when the plaintiff acted upon a request to carry out works contained in the defendant’s letter of intent, a contract had been formed between them whereby the plaintiff was liable for unlimited damages for late delivery. It was held that, while the letter of intent included a request to carry out works and that this request had indeed been acted upon, nevertheless it was apparent from other correspondence between the parties that the plaintiff had not been prepared to accept unlimited liability for damages for delay. Thus, it could not be said that by acting upon the request the plaintiff had assumed a liability it would not have accepted had the negotiations for the formal contract been continued.
As no agreement was reached on this important score, no contract existed between them. It was held that the plaintiff was entitled to recover the full value of its nodes on the basis of quantum meruit, and ordered the defendant “to pay a reasonable sum to the plaintiffs for the services rendered by them in respect of which they claimed remuneration, because the whole of the work fell right outside the normal work which a builder, by custom and usage, normally performed gratuitously when invited to tender for the erection of a building.Between the William Lacey and Regalian cases, Rattee J noted one particular distinction: in the former the estimates were prepared by the plaintiff “for some extraneous or collateral purpose.”(Lacey, 1968).
Rattee noted that the estimate prepared by Lacey was “for the wholly separate purpose of enabling the defendant to negotiate a claim made by the defendant to the War Damage Commission.” (Regalian, 1995).He also noted that the facts in Regalian may be distinguished from that in William Lacey in that the work performed by the plaintiff in the former, which is the subject of his claim, was “quite outside the ambit of the intended contract.” (Regalian, 1995).
It (cost estimate) was for the wholly separate purpose of enabling the defendant to negotiate a claim made by the defendant to the War Damage Commission. In the present case, by contrast, the expenditure for which Regalian claims recompense was, I find, all for the purpose either of satisfying the requirements of the proposed contract as to planning permission and the approval of the designs for the development by LDDC or of putting Regalian into a position of readiness to start the development in accordance with the terms of the proposed contract. In other words, it was expenditure made for the purpose of enabling Regalian to obtain and perform the expected contract. (Regalian).With regard to William Lacey, Rattee J stated that it was, to him, “a surprising decision” (Regalian) in view of the judge’s findings of fact to the effect that the plaintiff had earlier requested and been refused an assurance that it would be compensated for its preparatory work.
He stated that “whether the decision be right or wrong”, he did not feel obliged to apply it in the Regalian case, which is distinguishable on the facts in two particular respects.First, in the present case, unlike the Marston Construction Co case, even if a contract had materialised, no part of any costs incurred or work done by Regalian in connection with the contract would have been paid for by LDDC. The only obligation on LDDC would have been to grant the building lease. Secondly, as I have already said, I am not satisfied in the present case that the preparatory works resulted in any benefit to LDDC.
(Regalian, 1995).The ratio decidendi in the William Lacey case did not apply to Regalian because of certain factual distinctions. There was no implied promise on the part of the defendant corporations that a contract was to be entered into between the parties. The plaintiffs’ act of hiring professionals and experts to prepare designs in connection with the work was not done as part of the proposed contract, but only as part of the requirements imposed on the plaintiffs to obtain the licence. As there was no implied promise, no implied obligation could justify the plaintiffs’ demand for reimbursement. Nor can the principle of quantum meruit be applied in this case, as there was no showing that the defendant benefited from the work performed by the plaintiffs.
Rattee J makes a distinction with the case of British Steel Corporation. He notes thatThe present case is not analogous (with that of British Steel Corporation). The costs for which Regalian seeks reimbursement were incurred by it not by way of accelerated performance of the anticipated contract at the request of LDDC, but for the purpose of putting itself in a position to obtain and then perform the contract. (Regalian, 1995).
When the plaintiffs in Regalian incurred expenses by way of professional fees for designs needed in order to qualify for the licence, such act did not constitute an accelerated performance so as to entitle them to restitution under the principle of quantum meruit. In the British Steel Corporation case, there was a request on the part of the defendants for the delivery of the steel nodes. In the Regalian case, while there may have been encouragement for the plaintiffs to do as they did, such action on their part was not in relation to the redevelopment project which was to be the subject of their proposed contract, but to enable the plaintiff to fulfill the conditions for the obtaining of licence.The study of the foregoing cases tend to prove that there is a real need for the courts to exercise greater freedom in the determination of cases brought before them, for it is not unreasonable to expect that no two cases will ever have exactly the same facts or circumstances as to be bound by a common precedent.
Had there been no factual distinction between the cases, Rattee J would have been bound to apply the ratio decidendi of William Lacey to such extent as the law of the case would be applicable. He would determine whether there exists an implied promise or obligation, or whether the terms of quantum meruit are present. But in any case he would be free to depart from precedent in keeping with the declaration of their Lordships when, in view of the facts before him, too rigid adherence to previous rulings would lead to injustice or restrict the proper development of the law.;;;;;;;;;;;;;;;;;;;;;;;;;;BIBLIOGRAPHY/LIST OF REFERENCESBritish Steel Corporation v Cleveland Bridge. 1984. 1 AER 504.Conway Appellant v Rimmer and Another Respondents.
1968. AC 910.London Tramways Co v London County Council. 1898. HL.Marston Construction Co. Ltd v Kigass Ltd.
1990. Queen’s Bench Division. WL754924.Practice Statement. 1966.
Judicial Precedent. 1 WLR.Regalian Properties plc v London Dockland Development Corporation. 1995. All ER 1005Price, Polly J. 2002. Precedent and Judicial Power after the Founding.
Available at: ;http://www.bc.edu/bc_org/avp/law/lwsch/journals/bclaws/42_1/02/;William Lacey (Hounslow) Ltd v Davis. 1957. 2 All ER 712.;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;;