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High Court finds interim declaratory relief in the context of a contractual dispute to be a “very exceptional” remedy

  • United Kingdom
  • Financial services disputes and investigations
  • Litigation and dispute management - Other

01-10-2018

 

British Airline Pilots’ Association (“BALPA”) & Anr v British Airways Cityflyer Ltd [2018] EWHC 1889 (QB)

Facts of the case

– The Court has discretion to grant declaratory relief, either on a final or interim basis, on matters such as the rights of parties, the existence of facts or a principle of law which is at issue in a case (CPR r. 25(1)(1)(b)).

– The Claimants applied for an interim declaration that the Defendant was in breach of its members’ employment contracts by rostering pilots to work before 5:00am without obtaining the Claimants’ prior agreement.

– The employment contracts in question incorporated the terms of an agreement between the Claimants and the Defendant which contained a clause stating that pilots would not be rostered for duty between 2:00am and 4:59am without express agreement between the parties.

– The Defendant submitted that an interim declaration was not appropriate, and that it had an arguable case on the interpretation of the clause in question and its incorporation into the employment contracts.

The decision

– The High Court (Mr Justice Butcher) refused the Claimants’ application on the basis that:

– it had been shown no case in which an interim declaration had been granted in a private law dispute of contractual rights. The Court noted that an interim declaration would be an exceptional remedy even in a public law context;

– contractual issues of interpretation, variation and implied terms were matters of substantive law that only permitted a final answer, not a measure of interim relief;

– the Court did not have the “high degree of assurance” that was required to grant mandatory injunctive relief; and

– the balance of convenience weighed heavily in the favour of the Defendant, who would suffer the potential of considerable losses without compensation because the Claimants were not offering a cross undertaking in damages.

Analysis and practical advice

– The judgment highlights the reluctance of the Court to grant interim declaratory relief in claims relating to private law contractual rights, with the Court describing the remedy as “very exceptional”.

– This is not only because the rights contended for either do or do not exist, but because an application for an interim declaration effectively circumvents the requirements and safeguards of the summary judgment process. This is because the Court is being asked to determine, at least for the present, that there is no answer to a particular point, in circumstances where the matter is usually brought on at considerable speed. The Court observed that the dangers of this approach had been borne out in this case, which had involved “at very short notice points being deployed in witness statements, no proper joining of issues, [and] skeleton arguments which, to a large extent, did not deal with the same points and had to be expanded in an unrealistic time estimate to deal with points on the merits.”

– The case is also of interest for the Claimants’ contention that because they were applying for an interim declaration and not an injunction, they did not need to satisfy the balance of convenience test, or at least did not need to satisfy it in the same way. This was firmly rejected by the Court, which noted that the Claimants’ failure to offer a cross undertaking in damages meant it would have refused the application on this basis as well. As with all injunctions, parties on both sides should give careful consideration as to how the grant/refusal of the relief would impact on the their respective positions and, to the extent that one party is at significantly more risk of suffering loss as a result, consider how this might be addressed.

 

 

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