All change – what happens when the Supreme Court changes its mind

On rare occasions the Supreme Court decides that it should depart from its earlier decision on a point. What are the consequences when this happens?

On rare occasions the Supreme Court decides that it should depart from its earlier decision on a point. It has just done so in relation to the calculation of damages in fatal accident claims in Knauer v Ministry of Justice, departing from the earlier House of Lords decisions in Cookson v Knowles and Graham v Dodds.

The details of Knauer, although important, are not the focus of this discussion which is the wider-reaching effects of any such change. For example, how will it affect existing claims, can you reopen recently settled actions, can you appeal an earlier decision out of time and can you bring a claim, previously bound to fail, which on the face of it is time-barred? And how does it affect solicitors and barristers who have advised on the point in the recent past – might they be at risk of a claim against them for failing to anticipate the Supreme Court’s change of mind? We explore these points below.

When can the Supreme Court change its mind?

In the Practice Statement (Judicial Precedent) of 1966 the House of Lords recognised the importance of precedent but also recognised that too rigid adherence to it could lead to injustice in a particular case and unduly restrict the proper development of the law. They therefore decided to change their practice and to depart from a previous decision when it appeared right to do so.

Is the effect of the change retrospective or prospective?

Where judges change the law, the new law operates retrospectively. If exceptionally the Supreme Court were in the future to want to make a prospective or limited overruling, it would have to say so in terms (see In re Spectrum Plus Ltd). The 1966 Practice Statement makes this clear by concluding that the House of Lords “will 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 especial need for certainty as to the criminal law”.

The rather startling effect of retrospective change can be seen in the example of Hall v Simons, where the House of Lords overruled its 1967 decision in Rondel v Worsley. They held that changed social circumstances meant that advocates’ immunity from suit could no longer be justified. Since the decision in Hall v Simons was made in 2000 but the events giving rise to the claim took place in 1991, it wasn’t clear when the loss of immunity took effect. In Awoyome v Radford the loss of immunity was held to have occurred in 1991.

Can you appeal out of time?

The general rule is that the Court of Appeal will not allow an appeal to be made out of time if the only reason for the appeal is that subsequent cases have shown the previous perception of the legal position was mistaken. The special circumstances in which an appeal may be allowed out of time have been reviewed by the Court of Appeal in Greig Middleton & Company v Denderowicz and Richmond upon Thames LBC v Secretary of State for Transport. It is not enough for a party to say that a subsequent decision of a superior court has determined that the principle of law on which his case was decided was wrong. All of the circumstances must be looked at, including whether the party relied on reasonable advice and the merits of the appeal, and if the court considers it just to extend the time, it will do so.

Can new claims be brought out of time?

A change in the law by itself will not enable a claimant to bring a claim that would otherwise be time-barred. The latent damage provisions, sections 14 and 14A, in the Limitation Act 1980 have been closely circumscribed by the courts and will not help in such circumstances. However, where the claim is for personal injury, section 33 of the Act enables the court to extend the three year limitation period in section 11.

It is unusual to hear the rules of limitation of actions referred to in films, but lawyers watching the Oscar-winning Spotlight recently will have spotted such a reference in the context of claims for historic sexual abuse against Catholic priests in Boston. This problem was addressed in this jurisdiction in 2008 when the House of Lords in A v Hoare departed from its previous decision in Stubbings v Webb. The court decided that Stubbings was wrongly decided and that sections 11 and 33 should apply to sexual assault and abuse claims. The Court of Appeal has given guidance on the exercise of the section 33 discretion to extend time in this context in AB v Nugent Care Society and Raggett v Society of Jesus Trust.

How might a change in the law affect settlements?

In principle a settlement agreement can be set aside where there has been a mutual mistake of law. This argument was considered and rejected in Brennan v Bolt Burdon where the mistake concerned what the Court of Appeal described as the muddled state of the law about service (remedied shortly after by the Court of Appeal in Anderton v Clwyd County Council) rather than a true mistake of law. The agreement was in essence a give-and-take compromise which impliedly accepted and bargained away the risk of a future judicial decision affecting matters to the claimant's disadvantage. It was also material that the lawyers could have found out about the imminent appeals in Anderton. Parties wishing to reserve their rights in the event of a subsequent judicial decision in a future case were warned to include a term to that effect in their settlement agreement.

Is there a duty on lawyers to anticipate a change in the law?

Lawyers may be under a duty to advise clients about anticipated changes in the law, for example when an issue is known to be going to be determined by the Supreme Court. In Williams v Thompson Leatherdale the claimant settled her claim in a “big money” divorce case in August 2000, a month after argument had been heard by the House of Lords in White v White. Judgment was given in October 2000 and, as had been widely anticipated, the decision changed the law in favour of wives in “big money” cases. Neither Mrs Williams’ solicitors nor counsel advised her that the House of Lords was going to be making a decision which could change the law in her favour. Counsel (but not the solicitors) was found to be in breach of duty, although the claim failed because the court found that the claimant would still have concluded the August settlement.

A solicitor was held to have failed to have offered appropriate advice about a possible change in the law concerning the recovery of compound interest in Amalgamated Metal Corporation plc v Wragge & Co. Her client was claiming repayment of advance corporation tax (ACT) as part of a group action. Assuming that compound interest would continue to be irrecoverable at common law, the solicitor accepted an offer from HMRC. Unfortunately for the solicitor in question, two weeks previously Sempra Metals Ltd was substituted as the lead claimant in the group action and it was announced that the argument about compound interest was to be the primary contention. Four years later in 2007 Sempra Metals won the argument before the House of Lords (Sempra Metals Ltd (formerly Metallgesellschaft Ltd) v Inland Revenue Commissioners).

Is there any duty to go back and review closed matters?

In Shepherd Construction Ltd v Pinsent Mason, Akenhead J rejected the idea that professionals should be under some general retainer, or single contract, to review and revise all previous advice or work after the particular commission or retainer has come to an end. The cost for a lawyer of reviewing earlier advice would be considerable if it were to include research into legislative changes and current legal decisions. The only exception might be for a family solicitor but that would probably best be analysed by saying that the solicitor was acting under a general retainer.

However, if the retainer for a particular matter has only recently concluded before the change in the law and there is a possibility that the client might be able to appeal out of time, for example, a solicitor would, as a matter of good practice if not duty, wish to inform the client.

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