UK: Insurance And Reinsurance Weekly Update - 4 November 2014

Last Updated: 7 November 2014
Article by Nigel Brook

Welcome to the fortieth 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

  • McDonald v National Grid
    The Supreme Court holds that a lorry driver could recover for exposure to asbestos even though he was not required to go to a particular area where dust was generated.
  • Eurasian Natural Resources Corpn v Dechert LLP
    A Clyde & Co case on the scope of an implied waiver of legal professional privilege where a client seeks taxation of its former solicitors' bill.
  • Altomart v Salford Estates
    The Court of Appeal clarifies when an application for relief from sanctions has to be made and the meaning of a "sanction".
  • Excalibur Ventures LLC v Texas Keystone
    Professional funders are ordered to pay costs on an indemnity basis.
  • Rees v Gateley Wareing
    A Clyde & Co case on whether solicitors had carried out "contentious business" for their clients and whether they were entitled to a contingency fee.

McDonald v National Grid

Supreme Court decides whether lorry driver could recover for exposure to asbestos even though he was not required to go to a particular area where dust was generated

http://www.bailii.org/uk/cases/UKSC/2014/53.html

The claimant in this case died from mesothelioma earlier this year. He had worked as a lorry driver in the 1950s, when he would drive to Battersea power station in order to collect ash (which did not contain asbestos). Whilst at the power station he would go to other areas where asbestos dust was generated by lagging work (the work in question required the mixing of asbestos powder with water). The trial judge found that his exposure to asbestos was "of a modest level on a limited number of occasions over a relatively short period of time". Furthermore, he was not required to go to those areas in order to carry out his duties. The issue in this case was whether he could nevertheless sue the occupiers of the power station for breach of their statutory duties (namely, the Asbestos Industry Regulations 1931 and the Factories Act 1937). By a majority of 3:2, the Supreme Court has now held that he could.

The majority held that the 1931 Regulations had a wide scope and applied even if the main business of the workshop/factory was not the manufacture of asbestos and the work in question took place only occasionally. The term "mixing" in the Regulations should not be given a restricted, technical meaning either. It was also held that "it would be remarkable if the group to be protected was confined to those who were carrying out the process but those who were at risk from exposure because of their proximity to it should remain unprotected".

Nor did it matter that the claimant was not employed by the occupiers of the power station and was not required to go the that part of the site where he inhaled the dust which led to his development of mesothelioma. Citing an earlier Court of Appeal decision, it was held that there was nothing in the 1937 Act to justify the "gloss" that an employed person is protected only so long as he is acting within the scope of his employment.

The occupiers were under a duty to take practicable measures whenever a considerable quantity of (any kind of, not just injurious) dust was given off, and it did not matter whether that quantity of dust was considerable at the moment of inhalation.

Eurasian Natural Resources Corpn v Dechert LLP

Scope of implied waiver of legal professional privilege where client seeks taxation of solicitors' bill

http://www.bailii.org/ew/cases/EWHC/Ch/2014/3389.html

Clyde & Co (Richard Harrison and Nicole McKinnon) for respondent.

The claimant applied for an order for the taxation of bills from its former solicitors. The issue in this case was whether the application (and any detailed assessment of the bills which might be ordered) should be heard in private. The solicitors had been instructed to investigate an allegation of fraud made against the claimant. An SFO investigation into the same matter subsequently developed into an active criminal inquiry. The claimant was therefore concerned that, if the application were heard in public, the SFO might attend in order to glean information to assist that inquiry. It therefore wanted the application to be heard in private (otherwise it would withdraw the application) and sought to rely on the argument that a private hearing was appropriate because most of the solicitors' evidence was covered by legal professional privilege ("LPP"). Master Haworth declined the request for the application to be heard in private and an appeal was brought by the claimant.

It is an established principle that there is an implied waiver of LPP when a client commences proceedings against his former solicitors. The issue here was whether that implied waiver can be limited. After an extensive review of earlier caselaw, Roth J concluded that an implied waiver can be limited in the same way as an express waiver.

He rejected an argument by the solicitors that limited waiver can only arise where privileged documents are being provided to a third party and are not already in the possession of a party. Here, although there had been an implied waiver so that the solicitors could defend an application for taxation, there was "no ground for finding that privilege was thereby waived completely and for any use of the documents that is wholly irrelevant to that assessment. For example, the affairs of [the claimant], as a former public company, have attracted some media interest and I think that the implied waiver to which the ... application gave rise could not possibly entitle [the solicitors] to hand over all the documents concerning their former client to an inquiring journalist. Once the potential of an implied waiver being limited is recognised, this seems to me a classic case for its application."

Nor had confidentiality been lost because of the hearing before Master Haworth. There is a general principle that documents which have been read by a judge and relied upon in reaching his judgment are to be regarded as having entered into the public domain. However, Roth J said that that is "only the prima facie position" and this case was one where the interests of justice required that the reading by the costs judge of the papers should not have the effect of putting them into the public domain (and, indeed, Master Haworth had made an order pursuant to CPR r5.4C(4) to prevent non-parties obtaining a copy of any of the documents from the court file).

Roth J concluded on balance that the hearing (and any subsequent assessment) should be in private, and held that the solicitors concern to vindicate their reputation following the claimant's complaints (which have been referred to in the press) could be met by a public judgment determining the costs application.

COMMENT: This is the first reported case to confirm that an implied waiver of LPP between a client and its former solicitors can be limited, thus preventing solicitors (or the client) passing on documents unrelated to the dispute between them to a third party (there being no dispute here that there was no privilege between the client and the solicitors themselves). There is, however, textbook commentary to the effect that privilege cannot be asserted in any event in a dispute between a client and his solicitors because there is no confidentiality between them, although the documents remain confidential as against the rest of the world (see, for example, Phipson on Evidence, 18th edn. paras 26-28 and 26-40).

Altomart v Salford Estates

Court of Appeal clarifies when an application for relief from sanctions has to be made/ meaning of a sanction

http://www.bailii.org/ew/cases/EWCA/Civ/2014/1408.html

As has been previously reported, parties can now agree an extension of time where the rules provide for a sanction for failure to comply with a rule, practice direction or order (the so-called "buffer rule"). If no agreement is reached, the defaulting party can apply to court for relief from sanctions under CPR r3.9. In all other cases, the parties can agree an extension or, failing that, an application can be made to court for an extension pursuant to CPR r.3.1(2)(a).

In this case, the respondent was late filing its respondent's notice and applied for an extension of time. The Court of Appeal held as follows:

  1. Most rules do not provide specific sanctions for their breach and so CPR r3.9 will not apply.
  2. However, a number of cases have recognised the existence of "implied sanctions", capable of engaging the approach contained in CPR r3.9. An example of this was the earlier Court of Appeal decision of Sayers v Clarke Walker [2002], where an application for permission to appeal out of time was sought. The Court of Appeal applied CPR r3.9, on the basis that the consequence of filing the notice of appeal late was that the order of the lower court will stand, and cannot be appealed (and this therefore amounted to an implied sanction). Although the proceedings would proceed in any event if a respondent's notice is filed late, it was held that this case was analogous with Sayers v Clarke Walker: "In my view for a respondent to be prevented from pursuing the merits of a case it wishes to pursue on the appeal is no more or less of an implied sanction than it is for an appellant to be prevented from pursuing its case on appeal. In my view, therefore, the Mitchell principles apply with equal force".
  3. Applying the approach in Denton v TH White (see Weekly Update 26/14), although the delay here had been substantial (36 days late, when 14 days was allowed for the step), and the explanation for the delay was not persuasive, nevertheless it was clear that there would be little, if any, effect on the course of the proceedings, and so relief from sanctions was granted.

Excalibur Ventures LLC v Texas Keystone

Professional funders ordered to pay costs on an indemnity basis

http://www.bailii.org/ew/cases/EWHC/Comm/2014/3436.html

The claimants were ordered to pay the defendants' costs on the indemnity basis. The case was said to be "well outside the norm" because of various factors – such as the speculative and defective nature of the claims, and dishonest conduct by the claimants. When those costs were not paid, the defendants sought non-party costs orders, on the indemnity basis, against the claimants' professional funders. Clarke J held as follows:

  1. Non-party costs orders were justified on the basis that the claims could not have been brought without the assistance of the funders, who had a commercial interest in the outcome of the litigation. The position was no different for those funders who had left everything in the hands of the claimants and their lawyers: "In short, in a case of this kind justice requires that, when the case fails so comprehensively, not merely on the facts but because it was wholly bad in law, the funder should, subject to the Arkin cap, bear the costs ordered to be paid by the person whom or which he has unsuccessfully supported".
  2. The judge rejected an argument that the funder should not have to pay costs on the indemnity basis, absent any impropriety etc by the funders themselves. It was held that the width of the judge's discretion should not be restricted in this way. It did not matter that the funder may not have known about the faults of its client, in the same way that the client may be liable to pay indemnity costs because of the behaviour of those he chooses to engage (eg experts or witnesses).
  3. It was appropriate to apply the Arkin cap in this case (although that position might have been different had the funder behaved dishonestly or improperly or if the funder had taken complete control over the litigation (and thus fallen foul of the rule against champerty)). The Arkin cap restricts the level of a costs order against a funder to the amount of funding which the funder has provided.
  4. However, here, the cap should be measured not only by reference to the amount contributed by the funders in respect of the claimants' costs, but also, in addition, to the amount contributed solely to enable the claimants to give security for the defendants' costs (an order for security for costs having been made earlier in the case). This was a novel finding. The judge said that if the position was otherwise, a funder who only provides money for security for costs would face no possible exposure to a non-party costs order, whereas a funder who funded the costs would bear that burden (alone).
  5. The judge did accept an argument that the funders should be liable only for the costs incurred by the winning defendants after they had provided their funding, if it can be shown that they have not done anything which led to the defendants incurring costs before that time (ie the costs claimed must "to some extent" have been caused by the funder).

COMMENT: Funders and ATE insurers should be aware of the danger of facing a costs order assessed on the indemnity basis because of the conduct of their client (or its lawyers). As a result, it is important that they monitor a case in order to ensure that it is not being conducted in a manner which may give rise to indemnity costs. This should be balanced, though, against the danger of taking so much control over the litigation that they offend against the rule of champerty.

Rees v Gateley Wareing

Whether solicitors had carried out "contentious business" for their clients and whether they were entitled to a contingency fee

http://www.bailii.org/ew/cases/EWCA/Civ/2014/1351.html

Clyde & Co for respondents

Before 1st April 2013, contingency fees (whereby a lawyer would recover a share of a client's winnings) were not permitted for contentious work in England and Wales (although lawyers could conduct litigation under conditional fee agreements, where they would get a success fee (up to 100% of the normal fee) if the case succeeded and nothing, or sometimes a discounted fee, if it was lost).

The lawyers in this case (Gateley Wareing) sought to argue that they were entitled to agree a contingency fee (based on a percentage of any amount recovered for their clients) because they were carrying out non-contentious business for their clients (it was accepted that the agreement in place was not a valid conditional fee agreement). Under statute, non-contentious business is business which is not "contentious business" which in turn is defined as "business done, whether as a solicitor or advocate, in or for the purposes of proceedings before a court...."

Primlake (a company which the clients had a direct interest in) had retained another firm to conduct litigation on its behalf in terms of seeking recoveries from various parties but Gateley Wareing had continued to play a role behind the scenes in respect of their clients' direct interests. The issue was therefore whether Gateley Wareing had been carrying out contentious business for their clients (and were thus entitled to a contingency fee). The Court of Appeal has now held that Gateley Wareing performed tasks "ancillary" to the litigation that would otherwise have been carried out by the firm on the record and so they were exercising the right to conduct litigation (at least in part) and hence providing litigation services (albeit not all of them). It did not matter that Gateley Wareing were not on the record and were not directly involved in the litigation. The only two questions which had to be asked where:

  1. was the work carried out by the solicitor as a solicitor; and
  2. if so, was the work carried out for the purposes of the litigation.

The answer to both those questions here was "yes" and hence the retainer entered into between the clients and Gateley Wareing was unlawful and unenforceable.

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 Mondaq.com.

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

Authors
Nigel Brook
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions