Employment analysis: In McMahon v AXA ICAS, the Court of Session (CSIH) held that payments due under a permanent health insurance (PHI) scheme can continue to qualify as ‘wages’ under sections 13 and 27 of the Employment Rights Act 1996 (ERA 1996) even after dismissal, where the obligation to pay is collateral to the employment relationship. It rejected the view that termination automatically extinguishes such entitlement, distinguishing Delaney v Staples and drawing on Geys and USDAW. The case confirms that PHI entitlements may survive dismissal and be enforceable via unlawful deductions claims, not merely as damages.

Public Law analysis: Scotland—the Court of Session has refused a petitioner’s first plea in law, rendering their petition incompetent with regard to section 11A of the Tribunals, Courts and Enforcement Act 2007 (TCEA 2007) and refusing the petition. The petitioner sought to challenge the lawfulness of the restrictions on judicial review introduced by section 2 of the Judicial Review and Courts Act 2022 (JRACA 2022). The JRACA 2022 inserted section 11A into TCEA 2007, therefore removing judicial review as a route of challenge to a permission to appeal decision by the Upper Tribunal (UT) on the basis that such decisions are final and not liable to be questioned or set aside in another court. As a preliminary step, the petitioner sought a declaration that TCEA 2007, s 11A was unlawful, and separately null and void as well as seeking to overturn the UT’s decision of 5 September 2022 refusing permission to appeal. The petitioner argued that TCEA 2007, s 11A was unlawful firstly because the power to regulate judicial review procedure in Scotland is a devolved matter and secondly, because Parliamentary sovereignty was constrained by Article XIX of the 1707 Treaty of Union and by the common law. The Court held that the UK Parliament’s power to make laws for Scotland is unaffected by the Scotland Act 1988. It also held that TCEA 2007, s 11A was not inconsistent with the rule of law, nor that there was any conflict with Article XIX of the 1707 Treaty of Union. Written by Rowena Wisniewska Sethi, barrister and Ilana Hirschberg, pupil, 4-5 Gray’s Inn Square.

Construction analysis: Tilbury Douglas Construction Ltd (‘TD’) was appointed in November 2013 to provide enabling works for the re-development of a former railway yard. The development would require the ground to be lowered and the enabling works were necessary to ensure this could be done without compromising the integrity of two railway tunnels. Ove Arup & Partners Scotland Ltd (‘OA’) was appointed by TD to prepare the design for the enabling works. The OA design required to be significantly altered and resubmitted for approval resulting in TD incurring irrecoverable cost. In July 2019, TD sued OA alleging breach of contract and breach of duty of care in relation to the original design. Both parties accepted that the loss as incurred in November 2013 when the enabling works contract was entered into, meaning that on the face of things, the claim was prescribed. However, following a preliminary proof, Lord Harrower found that the action could proceed because (i) the commencement date for prescription should be postponed to August 2014, as before then TD could not have reasonably been aware of the loss; and (ii) the period up to November 2014 should be discounted as part of the prescriptive period, because during that time TD, by reason of error indued by OA, refrained from raising a claim. (sections 11(3) and 6(4) of the Prescription and Limitation (Scotland) Act 1973 (PL(S)A 1973)). Written by Alastair Walls, legal director and solicitor advocate at Pinsent Masons.

Arbitration analysis: Brandon Malone, solicitor advocate at Brandon Malone & Company, discusses the application of the confidentiality provisions of the Arbitration (Scotland) Act 2010 (A(S)A 2010) in North Lanarkshire Council v Stewart and Shields Ltd.

Tax analysis: In Bureau Workspace, the Outer House of the Scottish Court of Session refused a petition to judicially review HMRC's decision to deny a late claim for R&D expenditure credit (RDEC). While the amended corporation tax return was submitted on time by the taxpayer's agent, the corporation tax computation (which must also be submitted on time in order to make a valid RDEC claim and other R&D relief claims) was submitted 20 days late. The Court held that HMRC's refusal to accept the late RDEC claim was neither an error in law nor unreasonable.

Construction analysis: The Outer House of the Court of Session (CSOH) rejected an argument raised by an employer under a building contract that an adjudicator’s decision was unenforceable, because the adjudicator had failed to address a line of defence raised by the employer in the adjudication—namely, that a payment notice provided by the contractor did not attach an appendix setting out how the sums demanded had been calculated. On a thorough examination of the adjudicator’s decision, it was clear that the adjudicator had considered this issue, and had found that the appendix was validly included in the payment notice.

Environment analysis: In a significant Judgement, the Court of Session (Edinburgh) declared consents granted for development of the Rosebank and Jackdaw oil/gas fields unlawful and ruled on remedy (relief). The next key stage in a series of environmental/public law cases examining legal obligations relating to fossil fuel extraction, this case continues the journey from the landmark UK Supreme Court decision in Finch.

IP analysis: The Court of Appeal allowed Abbott’s appeal and overturned the revocation of its European (UK) Patent for a continuous glucose monitoring (CGM) device, finding that the High Court judge had misapplied the Pozzoli inventive step test by firstly construing the claims in a certain way, and then using a different construction when deciding obviousness. Dexcom had not provided evidence of obviousness in relation to the original construction. While the case does not change inventive‑step law, it highlights the importance of consistent claim construction and avoiding conflation of prior‑art embodiments. It also illustrates strategic considerations in high‑value markets, the risks posed by delayed judgments, and the Comptroller’s role in unopposed appeals. Written by Chris Burnett, partner–Patent Attorney at Knights.

Immigration analysis: In a decision handed down at the Court of Appeal, Lord Justice Laing has held that certain victims of trafficking (VOT) do not benefit from any KTT-based discretionary leave. Other victims of trafficking do. The distinguishing factor is whether a VOT has a deportation order. Namely, a concession was made by the Home Office for certain VOTs at the advent of the Nationality and Borders Act 2022 (NABA 2022). That concession is contained in the Home Office’s ‘Discretionary Leave’ policy. It holds that victims of trafficking, who had a positive Conclusive Grounds determination (CG) prior to 31 January 2023, and who also have an undecided re-trafficking based protection claim, should have their cases decided under the older framework. The older framework emerged from of Council of Europe Convention against Trafficking 2005. The principles were discussed and clarified in R (KTT) v SSHD. This concession, as it is contained in the Discretionary Leave Policy, also contains an exclusion for those victims who have a deportation order. They would, rather than being considered under the more generous KTT framework, be considered under the more stringent NABA 2022. The Court of Appeal held that this is lawful, and allowed the SSHD’s appeal, and dismissed the cross-appeal of S in relation to the Article 14 of the European Convention on Human Rights (ECHR) argument. Written by Parvez Anwar Pantho, caseworker at Duncan Lewis.

A court of appeal (or court of appeals) is a higher court that reviews decisions of lower courts to determine whether the law was correctly interpreted and applied, and whether procedural fairness was observed. It normally does not hear fresh evidence, but decides appeals on the record and on points of law (and, more rarely, mixed fact and law). The term is descriptive rather than a single defined term in legislation, but specific appellate courts are established and governed by statute and procedural rules in each jurisdiction. In England and Wales, the principal appellate court in civil and criminal matters (below the UK Supreme Court) is the Court of Appeal. Scotland has the Inner House of the Court of Session for civil appeals and the High Court of Justiciary for criminal appeals. Northern Ireland has the Court of Appeal in Northern Ireland. Ireland has the Court of Appeal and, above it, the Supreme Court. Courts of appeal are central to precedent, clarification and development of the law, ensuring consistency between first‑instance courts and providing a mechanism to correct legal error.

Having met the threshold test, the Court of Appeal had full discretion as to whether to order Olympic Airlines to provide security for costs in respect of its appeal against the winding-up order made in this jurisdiction. Although Olympic Airlines had submitted evidence that it was unable to provide security and that such an order would stifle its ability to appeal, it was incumbent upon it as respondent to the application to adduce evidence as to why it could not obtain security from elsewhere such as, specifically in this case, the Greek State. It had failed to do so. On the other hand, it would be ‘manifestly unjust’ for the Trustees to be at risk on costs of Olympic Airline’s appeal and so, having conducted the balancing exercise, security would be ordered.

DR analysis: Lord Justice Christopher Clarke has carefully traced the authorities on the issue of genuine pre-estimate of loss (liquidated damages) clauses versus penalty clauses. In so doing, he has added his own suggested (limited) guidelines to Lord Dunedin’s four propositions in Dunlop. He concluded that the forfeit of deferred consideration on breach of non-compete provisions in a share sale agreement was an unenforceable penalty clause. The deferred consideration was substantial and its forfeit extravagant, given the nature of the possible breaches that could trigger its forfeit. While consideration of whether the forfeit was extravagant and unreasonable was not determinative of whether the clause was penal, it was undoubtedly a relevant consideration. He rejected Cavendish’s submissions that there was commercial justification for the forfeit—the effect of the provisions was that Mr Makdessi stood to lose tens of millions—consequences which would occur on the first, not necessarily material, breach of any one of four different non-compete provisions, when the range of activities, which might amount to breach and of their possible consequences was likely to be very wide and to fall into different categories of seriousness many of which could not attract compensation anywhere near the value of what Mr Makdessi would forfeit or lose; thus the provision seemed ‘to go way beyond compensation and into the territory of deterrence’.