UK: Insurance And Reinsurance Weekly Update - 10 June 2014

Last Updated: 17 June 2014
Article by Nigel Brook

Collins v Secretary of State for Business Innovation and Skills & Ors

Court of Appeal decides whether court can take account of the claimant's delay from date of exposure to asbestos when deciding whether to disallow limitation period

http://www.bailii.org/ew/cases/EWCA/Civ/2014/717.html

The claimant worked as a dockworker between 1947 and 1967. He assisted in unloading cargos of asbestos during that time and was diagnosed with lung cancer in May 2002 (from which he subsequently recovered). After seeing an advert in July 2009, he contacted solicitors and commenced proceedings in May 2012. At first instance, the judge held that his claim was time barred and he appealed. The Court of Appeal has now dismissed that appeal.

The Court of Appeal agreed with the judge that the claimant ought to have inquired about the possible causes of his lung cancer by mid-2003. If he had have inquired, his doctor would have mentioned his exposure to asbestos. Accordingly, he had had constructive knowledge of a possible link between his cancer and his exposure to asbestos by that time and so his claim was brought outside of the six year limitation period.

The judge had refused to exercise his discretion under section 33 of the Limitation Act 1980 to disapply the limitation period. Section 33 provides that the court shall have regard to "all the circumstance of the case", including (a) the length and reason for the delay; and (b) the extent to which the evidence is, or is likely to be, less cogent than if the action had been brought in time.

In reaching his decision, the judge had taken into account delay occurring since 1947 and the principal question of law in the appeal was whether he had been entitled to do so. Although prior caselaw had considered whether delay prior to expiry of the limitation period can be taken into account, it has not done so at any length and nor has it considered the position for long tail industrial disease claims. Jackson LJ noted that there is caselaw authority for the principle that the court can take account of delay before the date of actual or constructive knowledge. However, he said that "it would be absurd if the defendant could rely upon all the prejudice accruing from the date when the breaches of duty occurred, alternatively from the date when (unknowingly) the claimant suffered injury... Loss of cogency of evidence during the limitation period must be a factor which carries more weight than ... the loss of cogency of evidence before the limitation clock starts to tick". Therefore: "although the court will have regard to time elapsed before the claimant's date of knowledge, the court will accord less weight to this factor. It will treat pre-limitation period effluxion of time as merely one of the relevant factors to take into account".

Here, there had been a time lag between breach and causation of injury and then a further delay before the date of constructive knowledge and so it was not possible to characterise the claimant's inactivity over the entire period since 1947 as "dilatoriness". However, the judge had not given undue weight to historic delays when reaching his decision. Furthermore, inconsistencies in the claimant's three witness statements did not only harm the claimant's own case, it also made it difficult for the defendants to deal with the relevant issues. The Court of Appeal held that judge had been "obviously correct".

Delaney v Secretary of State for Transport

Whether UK government was entitled under EU law to exclude cover for an uninsured driver where the car was being used to further a crime

http://www.bailii.org/ew/cases/EWHC/QB/2014/1785.html

As detailed in Weekly Update 46/11, the claimant suffered severe personal injuries when the car in which he was a passenger crashed due to the driver's negligence. The driver's insurers had avoided his motor insurance policy (on the ground, inter alia, that he had not disclosed, or had misrepresented, that he was a habitual cannabis user) and so he claimed under the Uninsured Drivers' Agreement 1999 ("the Agreement"). The Court of Appeal held that his claim failed because of clause 6(1)(e)(iii) of the Agreement, which excludes a claim by a claimant who has allowed himself to be carried in a vehicle if he could reasonably be expected to know, or ought to have known that "the vehicle was being used in the course or furtherance of a crime". Here, the judge had found that the purpose of the car journey had been to collect and transport illegal drugs (cannabis) for subsequent re-sale. (A defence of ex turpi causa failed, on the basis that the joint criminality was only the occasion, and not the cause, of the accident)

The claimant then brought proceedings against the Secretary of State for Transport, arguing that clause 6(1)(e)(iii) was incompatible with the relevant EU Directives (specifically, Article 1(4) of Directive 84/5 (the Second Directive), which provides for only one exclusion: namely, where a person voluntarily entered the vehicle knowing that it was uninsured. This is a separate ground for exclusion of a claim under clause 6 of the Agreement). Jay J held as follows:

  1. Article 1(4) does apply where a valid insurance policy was taken out but subsequently was avoided. It is not confined to situations where there was no valid insurance taken out in the first place. A raft of ECJ decisions has made it clear that a situation cannot arise whereby an insurer's avoidance of liability leaves a victim without any remedy at all.
  2. Articles 1(4) and 2(1) of the Second Directive require Member States to ensure that compensation is paid in all circumstances, save those expressly excluded within the text of those provisions. ECJ caselaw has made it clear that Member States cannot carve out additional exceptions.
  3. Clause 6(1)(e)(iii) is not consistent with the specific exceptions permitted by the Second Directive. Nor is it a sub-set of the separate exclusion relating to uninsured vehicles (the argument having been run that everyone knows that a vehicle being driven in the course or furtherance of crime is uninsured).

The judge went on to conclude that the defendant was guilty of a serious breach of Community law, entitling the claimant to compensation.

COMMENT: This decision will have no impact on motor insurers, who remain entitled to decline cover where a claimant has allowed himself to be carried in a vehicle being used to further a crime. Instead, the insurer of last resort, the Motor Insurers' Bureau, will no longer be able to refuse compensation on that basis.

Holloway & Ors v Transform Medical Group & Ors

Whether applicants should be allowed to join the group litigation after the cut-off date

The applicants applied to join the register of claims in this group litigation. The Group Litigation Order had provided that no claim may be added to the group register without the court's permission after a certain given cut-off date and the applications were made after that date. Thirlwall J dismissed the applications.

She held that CPR r3.9 applied in this situation, the cut-off date being a "sanction": "It is difficult to characterise as something other than a sanction a consequence that those who have not joined the group may not do so without the permission of the court". In reaching this conclusion, she rejected the applicants' argument that Taylor v Nugent Care Society [2004] applied (in that case, the Court of Appeal drew a distinction between a claimant who is part of a group not complying with a direction and the position of a claimant who has not yet joined).

Here the delays had been serious and the trial will take place in October. There was no good reason either – delays had been caused by staff shortages within the law firm retained by the applicants and "decisions to dismiss staff were presumably taken for commercial reasons. The consequent neglect of the files was entirely foreseeable". To grant the application would have been to undermine the discipline of the litigation and to render the cut-off date meaningless.

Coll v Floreat Merchant Banking

Whether committal proceedings can be brought against solicitor for breaching an undertaking given to a party and not the court

http://www.bailii.org/ew/cases/EWHC/QB/2014/1741.html

The novel issue in dispute in this case was whether the court has jurisdiction to allow committal proceedings to be brought against a solicitor for breaching an undertaking which was made to the other party and not to the court. Hickinbottom J summarised the position as follows:

  1. Although the High Court has a wide jurisdiction over solicitors as officers of the court (in addition to its inherent and statutory powers in relation to contempt), there are boundaries on the exercise of that jurisdiction.
  2. The High Court's jurisdiction is in addition to, and runs parallel to, the regulatory functions of the Law Society in relation to the discipline of solicitors, which are now performed by the SRA. However, unlike the High Court, the SRA has no power to order compensation for the breach of an undertaking (and nor does the court in its contempt jurisdiction). So the High Court's jurisdiction will only usually be exercised where someone has "lost out" as a result of the solicitors' conduct and the court is the appropriate forum to put right that loss.
  3. The courts have a general power summarily to enforce any undertaking given by solicitors. Where a solicitor is unable to comply with a positive undertaking (e.g. because it has become impossible to perform), the beneficiary of the undertaking may seek compensation. Where a solicitor has failed to perform a negative undertaking (i.e. that he/she will not do something), the appropriate course will be to seek an injunction: "It may also be appropriate to report the solicitor to the SRA for the breach of the regulations that require a solicitor to comply with undertakings he gives as a solicitor. It will not usually be appropriate to seek to commit the solicitor straightaway, because these other steps will usually be available".
  4. Furthermore, proceedings to commit a solicitor for breaching an undertaking not to the court should generally be discouraged on public policy (and European Convention on Human Rights) grounds. That is because: "There is clear potential for tactical mischief by a party seeking to commit a solicitor, which application might require that solicitor, at least temporarily, to withdraw from acting from his client".

The judge refused permission to bring the committal application.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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