UK: Insurance And Reinsurance Weekly Update - 17 June 2014

Last Updated: 25 June 2014
Article by Nigel Brook

Welcome to the twenty-second edition of Clyde & Co's (Re)insurance and litigation caselaw weekly updates for 2014.

A summary of recent developments in insurance, reinsurance and litigation law.

This week's caselaw

  • AB v Ministry of Justice
    A case on legal advice privilege and the need to identify the "client".
  • Kruppa v Benedetti
    A case on whether the parties had entered into an arbitration agreement.
  • Page v Champion
    A decision on whether a default judgment is binding on the other defendants to an action?
  • Harb v HRH Prince Abdul Aziz
    A case on whether sovereign immunity can be claimed after the death of the sovereign.
  • Scotland & Anor v British Credit Trust
    The Court of Appeal decides whether misrepresentation is needed to establish an "unfair relationship" in a PPI mis-selling case.

AB v Ministry of Justice

Legal advice privilege and the need to identify the "client"

The claimant alleged that the defendant did not comply with his "subject access" request under the Data Protection Act 1998. One of the defences raised by the defendant was that the withheld material was exempt from disclosure on the grounds of legal professional privilege (in particular, legal advice privilege). The two relevant documents were:

  1. A document in which the head of the Coroners' Section of the Home Office sought legal advice from an in-house lawyer. The claimant argued that there was no evidence that the individual seeking legal advice was authorised to do so on behalf of the Home Office. He relied on the Court of Appeal's Three Rivers (No.5) decision in support of his argument that the Court of Appeal limited who could be regarded as a client for the purpose of legal advice privilege. However, Baker J said that the Court of Appeal had been "dealing with a markedly different set of circumstances". In Three Rivers the client organisation had itself created a separate entity which was specifically responsible for seeking legal advice. However, in this case there was no evidence of a separate entity having been created. Furthermore, as head of his department (and in the absence of contrary evidence), it was implicit that the individual in question had authority to seek advice from the in-house lawyer
  2. An annotated copy of the document referred to in (1) above, which was sent to a non-lawyer for her opinion. The judge noted that legal advice privilege is not lost just because a request for legal advice (or the advice itself) is shown to a third party. However, here, a copy of the original document was sent to the non-lawyer for her independent opinion (either prior to or separate from the legal advice received from the lawyer). As a result, the copy was not privileged from disclosure

However, the judge held that although the claimant had suffered some damage, this was a case in which an award of nominal damages (GBP 1) was appropriate under the Act. The claimant was also awarded GBP 2,250 for distress. The Act provides that an individual must have suffered "damage" before an award of compensation for distress can be made and the judge concluded that it was sufficient that the claimant had been awarded nominal damages.

The judge went on to find that a further document did not fall within the scope of "personal data" under the Act, because it had merely been a conduit for the provision of information contained in other documents.

COMMENT: The judge's comments regarding "who is a client" for the purpose of legal advice privilege are noteworthy. The Three Rivers decision is widely considered to be authority for the view that only communications between those individuals within the client organisation who are charged with obtaining legal advice are the "client" for legal advice privilege, and so those individuals should be clearly identified as the "client". However, here the judge is suggesting that it is only if the client organisation itself chooses to arrange its affairs in that manner that a separate group need be identified as the "client". It is submitted that that view is correct. There is little discussion in the Three Rivers decision itself on this important practical issue and it is difficult to see why any individual within a company who is authorised to communicate with the company's lawyers on a particular issue or claim should not fall within the definition of a "client". However, it should be borne in mind that this is a decision of the High Court only and the Court of Appeal's decision in Three Rivers remains binding.

Kruppa v Benedetti

Whether parties had entered into an arbitration agreement

The defendant applied for a stay of English proceedings (pursuant to section 9 of the Arbitration Act 1996) on the basis that the parties had entered into an arbitration agreement. The clause in question read as follows: "In the event of any dispute between the parties pursuant to this Agreement, the parties will endeavour to first resolve the matter through Swiss arbitration. Should a resolution not be forthcoming, the courts of England shall have non-exclusive jurisdiction".

Cooke J held that this was not a binding arbitration agreement. He rejected the defendant's argument that the use of the word "arbitration" was sufficient for a finding that there was an arbitration agreement between the parties. He held that an agreement to "endeavour" to first resolve a matter through arbitration was not the same as an agreement to refer a dispute to arbitration.

Also, difficulties can arise where parties choose arbitration in Switzerland but fail to specify a particular cantonal seat, and the parties had not addressed that issue and further agreement between the parties on this point would have been required.

Furthermore, "it is logically not possible to have an effective multi-tier clause consisting of one binding tier (i.e. arbitration) followed by another binding tier (i.e. litigation)". If a dispute is to be referred to arbitration, any award arising out of that arbitration should be binding on the parties and ordinarily there should be no second stage thereafter.

Page v Champion

Is a default judgment binding on the other defendants to an action?

The principal issue in dispute in this case was phrased by the judge as follows: "Does a default judgment obtained against one defendant (defendant A) preclude another defendant in the same proceedings (defendant B) from advancing, by way of defence to a claim against it (defendant B), a case which is inconsistent with the default judgment which has been obtained (against defendant A)?" He concluded that it does not. Most importantly, the need to avoid inconsistency between judgments (especially when those judgments are within the same proceedings) is outweighed by the "overriding" need to ensure that a co-defendant (i.e. defendant B) is able to put forward the case which it wants to advance. Furthermore, there was no reason why defendant B should be bound by defendant A's decision not to acknowledge service of the proceedings and the effect of the default judgment should only affect defendant A.

Furthermore, CPR r12.8(2)(a) provides that where a claim can be dealt with separately, the court can continue proceedings against other defendants who are not the subject of a default judgment. That was the position here. Even if that was not correct, CPR r12.8(2)(b) would apply instead. This provides that where a claim cannot be dealt with separately (and here the court is looking at the claim against defendant A and not that against defendant B), the court will not enter default judgment but will instead "deal with the application [for default judgment] at the same time as it disposes of the claim against the other defendants".

One further point discussed in the case was an application to set aside a default judgment under CPR r13.3. In Mid-East Sales (see Weekly Update 18/14), Burton J disagreed with Silber J in an earlier decision and held that applications under CPR r13.3 (and CPR r3.9 - applications for relief from sanction)"may allow different or wider considerations to be taken into account, or more than trivial delays to be addressed". That approach was supported in this case. The judge also said that it would be wrong to apply CPR r3.9 in this case in any event, since defendant B was not the party in default.

Harb v HRH Prince Abdul Aziz

Whether sovereign immunity can be claimed after death of the sovereign

The novel issue in dispute in this case is whether, where a sovereign ceases to be head of state on death, his immunity from suit continues to extend to everything which he did when he was head of state, whether of an official or private nature. There is no prior caselaw involving a claim made against the estate of a head of state who has died in office. It is, however, an established principle that when a head of state ceases to hold office during his lifetime, his on-going immunity from suit is thereafter limited to acts which constituted the performance of his official functions during his period in office.

Having reviewed prior caselaw, Rose J identified a principle that "a state is to be regarded as intolerably affronted by a foreign court asserting jurisdiction over the private affairs of its head of state on one day and then not so affronted if that court asserts jurisdiction the next day, the head of state having stood down or been deposed in the interim. This is not because the high esteem and affection in which that head of state is held by his subjects instantly evaporates the moment he steps down from office but rather because their esteem and affection is nothing to the point". Applying this principle to the present case, the judge did not accept that a sovereign who dies in office remains the embodiment of the state once deceased. A new head will take the sovereign's place and there is no room for two embodiments of the state to exist at the same time. Furthermore, there was no justification for treating a head of state who dies in office in a more favourable way than a former head of state who dies some time after leaving office.

Here, an agreement entered into between the head of state and the claimant was a private matter rather than an exercise of the head of state's official functions. Accordingly, the defendant was not entitled to immunity from suit to defeat the claimant's action.

Scotland & Anor v British Credit Trust

Court of Appeal decides whether misrepresentation is needed to establish "unfair relationship" in a PPI case

The claimants took out a loan with the defendant and were misled by the defendant's broker into believing that they needed to purchase payment protection insurance in order to secure a loan. At first instance, the judge held that that there had been a misrepresentation and breach of the ICOB rules which in turn created an "unfair relationship" under section 140 of the Consumer Credit Act 1974, entitling the claimants to compensation.

One of the issues considered in this appeal was whether the judge had been wrong to take into account the misrepresentation when deciding whether the relationship was unfair and whether a finding of misrepresentation and a breach of the ICOB rules should be determinative of the question whether there was an unfair relationship. The defendant sought to rely on the Harrison v Black Horse case (see Weekly Update 37/11) in which Tomlinson LJ had observed that a misrepresentation was ordinarily likely to be irrelevant to the question whether a relationship was unfair. Here, Kitchin LJ said that "I recognise that a misrepresentation may not create or even contribute to an unfair relationship but I do not understand Tomlinson LJ to have been suggesting that it can never do so. Indeed it seems to me that it plainly can".

He distinguished this case on the basis that, but for the misrepresentation and associated breaches of the ICOB rules, the claimants would not have taken out the loan (whereas in Harrison the ICOB rules then in force did not require the disclosure of the existence or amount of any commission). Furthermore, although the judge accepted that the ICOB rules did not apply to the defendant, they nevertheless provided a benchmark, or "touchstone", against which the conduct of the broker could be measured.

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Nigel Brook
In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.