It is perhaps worth pointing out that the word “interpretation” does not appear once in Belize Telecom. Lord Hoffmann used the term “construction”, I believe deliberately, as a broader term embracing interpretation, implication of terms and other tasks relating to the application, scope and legal effect of a contract. When he said that implication is part of the process of determining the objective meaning of the relevant instrument, he was not, unlike in ICS, referring solely to linguistic meaning of the express terms. He was suggesting that the issue in every case of an alleged implied in fact term is whether the parties can reasonably be taken to have intended their relationship to include the alleged right, obligation, or condition (as the case may be).
The judgment of Lord Neuberger in Marks and Spencer, which can be taken as the majority view since Lord Sumption and Lord Hodge agreed, can only be described as simplistic. Nothing in it causes me to doubt any of the points in my defence of Belize Telecom in [2014] LMCLQ 203. It cannot be right, for example, that construction and implication “are different processes governed by different rules”. And it almost beggars belief that more weight should be given to the decisions of the Singapore Court of Appeal in this area than the seminal judgment of the Privy Council delivered by Lord Hoffmann which, in my view (cf Carter and Courtney [2015] LMCLQ 245), made the law more intelligible and put it on a sounder conceptual footing. As I have demonstrated, the reasoning in the Singapore decisions is difficult to accept in several respects and repeats misunderstandings of what Lord Hoffmann actually said that appear in some of the academic literature cited by the court. Even more disturbing is Lord Neuberger’s unworthy put-down of Lord Hoffmann when he says that the latter’s “observations” in Belize Telecom “should henceforth be treated as a characteristically inspired discussion rather than authoritative guidance on the law of implied terms”. Judgments such as this cause me to wonder whether the UKSC should any longer be regarded as the Commonwealth’s highest court!
It should not be forgotten either that Lord Neuberger has been at the forefront of increasingly successful attempts in recent times to undermine central planks of the ICS principles of interpretation. Lord Hoffmann’s legacy in this area too appears in danger of being rather more short-lived than I, and no doubt many others, would have imagined. But that is a story for another day.
Sent: Wednesday, 2 December 2015 5:52 a.m.
To: 'Angela Swan'; 'ODG'
Subject: RE: UKSC on implied terms
Angela is right that the question is about allocating risk and wrong that it has almost nothing to do with interpretation. Interpretation is understanding what was meant in the light of the context. The context includes that sensible people assume that normal and or sensible (perhaps because sensible is normal) things will apply if they have not expressly agreed otherwise. It would be normal for the person with cheapest access to the information (and/or therefore a cheaper and more realistic chance of insuring) to be treated as responsible for a particular matter, because that is efficient between the parties (efficiency being a general goal of commercial people, not a goal of the law), unless they agree otherwise (explicitly or implicitly). It would be normal for a hotel room to include a bed and a lock. Without interpretation you have an undirected and unjustified balancing of incommensurable policy factors, is my view.
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Adam Kramer
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CONFIDENTIALITY NOTICE |
From: MACQUEEN Hector [mailto:Hector.MacQueen@ed.ac.uk]
Sent: 02 December 2015 15:45
To: Angela Swan; 'Andrew Robertson'; ODG
Subject: Re: UKSC on implied terms
Isn't the first question though whether or not the contract expressly allocates the risk? That is a matter of interpretation. Once you decide that there is no express allocation of risk, then the answer may be, as Hoffmann pointed out in Belize, that losses lie where they fall. Implying terms, or deciding judicially which party is better able to deal with the risk, is very much the exception, not the rule.
Hector
Hector L MacQueen FBA FRSE
Professor of Private Law
University of Edinburgh Law School
Old College
South Bridge
Edinburgh EH8 9 YL
Currently working at the Scottish Law Commission tel (0)131-662-5222
From: Angela Swan <aswan@airdberlis.com>
Sent: 02 December 2015 15:19
To: 'Andrew Robertson'; ODG
Subject: RE: UKSC on implied terms
The idea that the “implication of terms” is an exercise in interpretation is unhelpful and obscures the real problem. That problem is to allocate a loss that has occurred.
The Moorcock is a case allocating to the wharfinger the risk of loss arising from his failure to warn the master of the ship that it was unsafe to moor at his dock. That allocation of the risk is exactly the same as the default allocation of the risks of loss arising from the purchase of defective goods made by the Sale of Goods Act. The reason for the allocation made by the Court of Appeal is that it makes more sense to allocate the risk to the wharfinger because he has seen the tide come in and go out countless times and is in a much better position than the master of the ship to know whether the berth is safe or not — a reason all the judges, Lord Esher M.R. (at 66), Bowen L.J. (at 69) and Fry L.J. (at 71), give in their respective judgments for imposing on the wharfinger the risk of loss from the uneven ground. In other words, putting the risk of loss on the party with the cheapest access to the information which could avoid it makes sense.
Belize Telecom and now Marks and Spencer simply allocate a risk of loss arising from a solicitor’s carelessness or failure to consider an obvious event that might occur. The only important question is to consider how those allocations should be made. “Interpretation” has almost nothing to do with that question.
Angela Swan
From: Andrew Robertson [mailto:a.robertson@unimelb.edu.au]
Sent: December-02-15 7:12 AM
To: ODG
Subject: UKSC on implied terms
Dear ODG members,
The UKSC today handed down its judgment in Marks and Spencer plc v BNP Paribas Securities Services Trust Company (Jersey) Limited [2015] UKSC 72. It can be found at:
The case concerned a commercial lease which required rent to be paid quarterly in advance. The lease also contained a break clause, allowing the tenant to terminate it part way through a rent quarter. The issue in essence was whether a term would be implied requiring the landlord to repay the portion of advance rent representing the period following the break date. The primary judge unconvincingly said yes, CA unanimously no, SC unanimously no. The SC felt obliged to clarify the law on implied terms in light of Belize Telecom. Their Lordships differed as to the utility of the Belize Telecom approach, but were unanimous that it did not water down the strict requirements for implication.
Lord Neuberger (with whom Lord Sumption, Lord Hodge and Lord Clarke agreed) held that Belize Telecom did not change the law and did not dilute the requirements that must be satisfied before a term will be implied. At [24]: 'The Singapore Court of Appeal were in my view right to hold that the law governing the circumstances in which a term will be implied into a contract remains unchanged following Belize Telecom.' Lord Neuberger assimilated the Belize approach with the traditional tests, and in so doing took all of the wind out of its sails. He said at [23] that the Belize Telecom formulation is 'quite acceptable' provided the reasonable reader 'would consider the term to be so obvious as to go without saying or to be necessary for business efficacy.' In other words it is quite acceptable as long as it doesn't have any effect at all.
Lord Carnworth was more favourably disposed towards the interpretative spirit of Belize Telecom, and less favourably disposed towards the analysis the of Singapore CA, but agreed that Belize 'is not to be read as involving any relaxation of the traditional, highly restrictive approach to implication of terms.'
There is some useful dicta (e.g., at [21] that necessity and obviousness can be treated as alternatives), and the treatment of Belize Telecom (and BP Refinery) will no doubt be much discussed, but the judgments don't really advance the law on implied terms. If anything they take it backwards. That is a shame but it seems to me that it is not the fault of their Lordships: the case was not a good vehicle for developing the law or for thinking through the implications of Belize Telecom.
With best wishes,
Andrew
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