UK: (Re)Insurance Weekly Update 5 - 2015

Last Updated: 13 February 2015
Article by Nigel Brook

Welcome to the fifth edition of Clyde & Co's (Re)insurance and litigation caselaw weekly updates for 2015.

These updates are aimed at keeping you up to speed and informed of the latest developments in caselaw relevant to your practice.

This week's caselaw

  • Impact Funding v Barrington
    The Court of Appeal determines whether a PI insurer is obliged to indemnify a solicitor who is liable to a disbursements funder.
  • Rai v Legal & General Assurance Society
    A case on whether an insured should be restored to the Companies Register in order to allow a beneficiary to claim.
  • Sierra Fishing v Farran
    An application to remove an arbitrator and whether a party had taken part in the arbitral proceedings.
  • Bishop v Chhokar
    A decision on whether a refusal to give permission to appeal should be set aside where the respondent had lied at trial.

Impact Funding v Barrington

Whether PI insurer obliged to indemnify solicitor who is liable to disbursements funder

A firm of solicitors arranged funding for disbursements incurred by its clients in order to bring their personal injury claims. When several of those claims were abandoned (because of limitation issues or because they were intrinsically unmeritorious), the funders sought recovery. Where the clients' legal expenses or after the event insurers did not pay (because, for example, the policy had been avoided), the funders sought recovery instead from the solicitors. The issue in this case was whether the solicitors' professional indemnity insurers were obliged to indemnify the solicitors in respect of their liability to the funders.

The answer to that issue turned on the interpretation of an exclusion in the professional indemnity insurance policy which excluded cover for any "(a) trading or personal debt of any insured, or (b) breach by any insured of the terms of any contract or arrangement for the supply to, or use by, any insured of goods or services in the course of the Insured Firm's Practice".

The Court of Appeal held that to determine whether the exclusion applied, it was necessary "to stand back from the detail and ask oneself what is the essential purpose" of this exclusion. It found that it was to prevent insurers being liable for a solicitor's liabilities "in respect of those aspects of his practice which might affect him or her personally as opposed to liabilities arising from his professional obligations to his or her client". So, for example, PI insurers would not cover liability incurred by a solicitor to the supplier of a photocopier or cleaning services. However, such personal obligations should be distinguished from obligations incurred in connection with the solicitor's duty to his clients. The loans in question here, made to cover disbursements in intended litigation, "are essentially part and parcel of the obligations assumed by a solicitor in respect of his professional duties to his clients rather than obligations personal to the solicitor". The position would only be different if it could be proven that the solicitors had been operating a scam of obtaining loans for personal purposes, without any intention of obtaining clients' instructions.

Hence the insurers were liable to indemnify the solicitors.

Rai v Legal & General Assurance Society

Whether insured should be restored to the Companies Register in order to allow a beneficiary to claim

A group death in service benefits policy was taken out by a company for the benefit of its employees. That company was struck off the Companies Register, on the application of its directors, in 2012.

In 2008 one of its employees had been killed in India, having permanently transferred there to help expand the company's business. The employee's wife sought to claim under the policy. The judge held that she could not do so, because of a policy exclusion for employees who were not ordinarily employed and resident in the UK. Although not required to do so, the judge nevertheless went on to consider whether (if the claim had been valid) the court ought to have granted a declaration that the insurer was obliged to pay the company after restoration of the company to the register. The policy expressly excluded the right of any third party to enforce the contract and there was no assignment in favour of the widow.

The approach of the court is normally that a declaration will be made if it would serve a useful purpose. Citing earlier caselaw, the judge held that declaratory relief should not necessarily be precluded by the claimant's lack of any beneficial interest in any monies which the company might receive. Nor was it problematic that the widow is not a party to the policy and is unable to enforce it or compel the company to enforce it. Accordingly, had a different conclusion been reached on the merits of the claim, the judge said that he would not have been satisfied that the matter could necessarily have been properly and fairly resolved without restoring the company to the register and joining it to the action (although in the particular circumstances of the case, an adjournment or stay would have been more appropriate).

Sierra Fishing v Farran

Application to remove arbitrator and whether a party had taken part in the arbitral proceedings

The claimants applied to remove an arbitrator on the ground of apparent bias (pursuant to section 24 of the Arbitration Act 1996). Popplewell J found, on the facts, that there had been apparent bias. He found that, through his work as a lawyer, the arbitrator had had a financial interest in favouring the defendants. In reaching this conclusion, assistance was derived from the IBA Guidelines which include the following on their Non-Waivable Red List: "the arbitrator regularly advises the appointing party....and the arbitrator or his or her firm derives a significant financial income therefrom". There were also separate objections that the arbitrator had given legal advice on the dispute in the past and his conduct of the reference gave doubts to his impartiality. These also gave sufficient grounds to doubt the arbitrator's impartiality.

The defendants argued, though, that the claimants had lost their right to object under section 73 of the Act. This provides that if a party takes part, or continues to take part, in the arbitration without raising its objection forthwith, when it knew (or could with reasonable diligence have known) about the relevant circumstances, the right to object is lost. Popplewell J held that where there are three sets of circumstances, which are each sufficient on their own to give rise to doubts about the arbitrator's impartiality, it is necessary to consider separately whether the claimants have lost the right to rely on each such set of circumstances.

The judge also held that, where a party has not already been taking part, mere silence or inactivity will not be sufficient to lose the right to object. Here, there had been no "taking part" within the meaning of section 73. For example, a request to put the arbitration on hold (or to adjourn a procedural hearing) was "entirely neutral" and mere silence in the face of revival of the process by the other party was equally incapable of amounting to a first taking part. The judge also noted that "Nor can the Claimants' indication that it would be appointing its own arbitrator amount to taking part, because it does not recognise the tribunal as yet being properly constituted and therefore cannot amount to invoking the jurisdiction of a tribunal in its improperly or imperfectly constituted form".

Bishop v Chhokar

Whether refusal to give permission to appeal should be set aside where respondent had lied at trial

This was an application pursuant to CPR r52.17 to set aside an order from the Court of Appeal refusing the appellant permission to appeal. The appellant claims that the original judgment had been obtained by fraud. CPR r52.17 provides that the Court of Appeal will not reopen a final determination of any appeal unless (a) it is necessary to do so in order to avoid real injustice; (b) the circumstances are exceptional and make it appropriate to reopen the appeal; and (c) there is no alternative remedy (an "appeal" in this context includes an application for permission to appeal).

Aikens LJ said that it is requirement (c) which causes difficulty in general. A debate has taken place since this rule came into force in 2003 as to whether, where it asserted that the original decision was obtained by fraud, there is an "alternative effective remedy" because the proper course is that a fresh action should be commenced to set aside the original judgment. If that is correct, CPR r52.17 cannot be relied upon to reopen an appeal (or permission to appeal).

The Court of Appeal accepted that there are difficulties in mounting a second action in the county court to rescind an earlier judgment obtained by fraud and it is seriously open to doubt that the High Court has the jurisdiction to impeach the original county court decision. For those jurisdictional and procedural reasons, it could not be said that there was an effective alternative remedy in this case. Accordingly, the Court of Appeal did have jurisdiction to set aside the order refusing permission to appeal and, on the facts, agreed to do so.

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.