John McKendrick succeeds in commercial regulatory strike out

John successfully acted for EDI Plc resisting an appeal against a decision to strike out and grant summary judgment against a counterclaim for damages in the case of DCAS Business School v EDI Plc [2013] EWHC 3378 (QB).

At the relevant time EDI Plc was a private company that acted under a statutory scheme as quasi regulator of providers of national vocational qualifications. DCAS Business school, which purported to offer such qualifications, counterclaimed against EDI in breach of contract and in negligence for the manner in which EDI regulated DCAS’s business. DCAS claimed it had suffered significant financial loss. EDI applied to strike out the counter claim and sought summary judgment. This was granted. DCAS appealed to the High Court.

Mrs Justice Andrews dismissed their appeal. Applying Jain v Trent Strategic Health Authority [2009] UKHL 4 she held that a regulator, even if it was a private body operating for profit, did not owe a duty of care to the class of persons it regulated.

Mrs Justice Andrews also dismissed the claim in contract, accepting John’s submission, namely:

“Mr McKendrick also pointed that the real complaint, in relation to the alleged breach of contract, was based upon an alleged failure by EDI to adhere to the requirements of the implied term implied by statute under the Supply of Goods and Services Act, s.13, which imports into contracts for services a certain standard, namely, one of reasonable care in the provision of those services. So far as that was concerned, Mr McKendrick relied heavily, as he did below, upon the decision of Mrs Justice Gloster in the case of Euroption Strategic Fund Ltd v Skandinaviska Enskilda Banken AB [2012] EWHC 584 Com Mrs Justice Gloster said this:

“In my judgment, SEB’s rights under the Mandate to impose limits on Euroption’s activities under clause 6, to close out Euroption’s positions under clause 11, or to refuse instructions under clause 12 (c) cannot be characterised as ‘services’ within the definition contained in section 12 (1) of the Act (meaning the Supply of Goods and Services Act 1982). The definition in section 12(1) of ‘contract for the supply of a service’ is (subject to exclusions) ‘a contract under which a person (‘the supplier’) agrees to carry out a service’. Thus the ‘implied term about care and skill’ imposed by section 13 of the Act only applies to services agreed to be provided under a contract for services and not to all rights and obligations under such a contract.

In my judgment, that is the appropriate test in a case such as this. Section 13 applies only to the services that one party agrees to provide to the other contracting party.”

John was instructed by Kit Jarvis at Field Fisher Waterhouse.

News 11 Nov, 2013