UK: (Re)Insurance Weekly Update 22 - 2015

Last Updated: 25 June 2015
Article by Nigel Brook

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

This Week's Caselaw

Mapfre Mutualidad Compania v Keefe

Court of Appeal considers whether English claimant could bring a claim against a Spanish insurer and Spanish insured in England

The English claimant was injured while staying at the second defendant's hotel in Spain. He claimed against the second defendant's Spanish insurer in English proceedings. The insurer did not challenge jurisdiction. However, the policy limit was lower than the level of damages being claimed and so the claimant joined the second defendant (a Spanish company) to the proceedings too. This issue was of importance to the claimant because damages will be higher if assessed under English, rather than Spanish, law.

The Rome II Regulation did not apply to this case, the accident having taken place before 11 January 2009.

The second defendant argued that the English court did not have jurisdiction to hear either the claim against it or the insurer. Jurisdiction was governed by Regulation 44/2001, Article 11 of which provides that an injured party can bring a direct action in his own country against an insurer domiciled in a Member State "where such direct actions are permitted" (Article 11(2)). It also provides that "if the law governing such direct action provides that the...insured may be joined as a party to the action, the same court shall have jurisdiction over them" (Article 11(3)).

In the CJEU decision of Odenbreit [2007], it was held that the direct action against the insurer had to be permitted in accordance with the law where the claimant (and not the insurer) is domiciled. That was thought to be important here because direct actions against insurers in the circumstances of this case are not permitted under English law. However, Odenbreit was a motor insurance case, and the relevant EU Directive provides that all Member States are obliged to ensure that an injured party in a motor accident has a direct action against the tortfeasor's insurer. The issue in this case was whether the same principle applies outside of motor insurance.

The Court of Appeal concluded that it does not. The relevant law under Article 11(2) which determines whether a direct action is allowed is the law of the court where the action is to be brought. Although that meant English law here, that was not limited to English procedural law but included the private international law rules in operation before Rome II. As a result, a direct action against the insurer was permitted under English law, because English law would regard that issue as one to be determined by reference to Spanish law (which does allow a direct action to be brought against an insurer).

Although not required to decide the point, the Court of Appeal also held that an insurer cannot force an insured tortfeasor to be sued in the victim's home court just by consenting to jurisdiction (where that court would not otherwise have had jurisdiction over the tortfeasor).

The Court of Appeal then went on to consider whether the English court also had jurisdiction over the insured.

The insured sought to argue that since the claimant's claim against it was "for the uninsured excess", it could not be characterised as being one made "in matters relating to insurance" and so Article 11 did not apply at all – instead the rules for tort claims should be applied. That argument was rejected by the Court of Appeal. The Regulation should be construed purposively and there was no requirement that there should be a policy dispute for Article 11 to apply. There was also no need for the claimant to satisfy a test that the claim against the insured is "closely connected" to the claim against the insurer.

Finally, the Court of Appeal also held that the English court, as the court seised of the direct action against the insurer, was bound to accept jurisdiction against the insured too if the claimant wished to join him, and had no discretion to decline jurisdiction under Article 11(3).

COMMENT: As noted by Gloster LJ in this decision, cases like these are likely to decline in future, given that Rome II will apply to accidents occurring on or after 11 January 2009. Rome II provides that the quantification of damage in a tort claim must be determined by the law of the country in which the damage occurs, and not the procedural law of the court hearing the dispute. Accordingly, in this case, there would have been no advantage to the claimant in bringing his claim in England, notwithstanding the jurisdictional rules under Regulation 44/2001 (now recast as Regulation 1215/2012).

Maharaj v Johnson

Privy Council considers time bar test for a negligence claim based on a "flawed transaction"

In cases of negligence resulting in economic loss, there is an actual loss (and hence time starts running) if there is a diminution in value/money for the claimant. It makes no difference if the loss has not crystallised yet. If the case is one of a "flawed transaction" (ie the claimant would still have entered into an analogous, flawless transaction, in the absence of the defendant's negligence), the question is whether the value to the claimant of that transaction is measurably less than what would have been the value to him of a flawless transaction. If, instead, the claimant would not have entered into the transaction at all (a "no transaction" case), the question is whether, and if so at what point, the transaction into which the claimant entered caused his financial position to be measurably worse than if he had not entered into it. Where the client has a purely contingent liability or loss, though, because of the professional's negligence, the cause of action accrues only when the contingency actually does occur and damage is suffered.

The Privy Council concluded that this was a flawed transaction case. It then went on to consider whether it is correct to say that damage is always suffered at the time of entry into the flawed transaction.  Although some Court of Appeal judges have held that a claimant suffers damage as soon as he receives something different to that which ought to have been received, the Privy Council unanimously disagreed with that view: "There is no substitute for attending to the particular facts and deciding whether such an inference is to be properly drawn from them". On the facts of this case, such an inference could be drawn".

The Board also rejected an argument that this was a case of breach of a continuing contractual duty (the defendant's fees having been paid and the file closed some 22 years ago). Lord Clarke dissented on this point, though. He felt it was arguable that, unbeknown to both sides, the defendants had owed a contractual duty to the claimant for more than 22 years.

COMMENT: This case approves the decision in Knapp v Ecclesiastical Group [1998], where an insurance policy was avoided after brokers failed to disclose material facts to the insurers. There, the Court of Appeal held that the claim against the brokers was time-barred because actual damage had been suffered by the insured at the time the policy was renewed (and that the renewal had been a flawed transaction). Hobhouse LJ had gone on, though, to find that it was possible to envisage other situations in which the fault could so easily be remedied that the damage would be no more than nominal.

Jsc Mezhdunarodniy v Pugachev

Judge confirms test for ordering the costs of a cross-examination hearing relating to a freezing order

The claimants obtained a freezing order against the defendant in aid of Russian proceedings. The claimants sought their costs, on an indemnity basis, of a cross-examination hearing intended to assist the policing of the order by obtaining evidence from the defendant as to his assets. The claimants argued that they were entitled to these costs because the defendant had been evasive and dishonest. Hildyard J held that the court should take into account the following factors (amongst others) when deciding whether an order for costs against the defendant should be made in such circumstances:

  1. Whether the cross-examination elicits information which should previously have been disclosed;
  2. Whether the defendant has been cooperative or evasive;
  3. Whether the cross-examination has been proportionate;
  4. Whether overall the cross-examination has proved to be a profitable exercise.

On the facts of this case, the judge held that costs should be awarded in favour of the claimants on the standard basis. He rejected an argument that costs should be awarded on the indemnity basis though: the claimant was unable to meet the "particularly high" standard required ie that the defendant was not merely evasive but had actually intended to obstruct justice (ie by giving plainly and obviously false answers).

The judge also considered the test for whether further affidavit evidence should be ordered from the defendant. He said that the court must be persuaded that there is "practical utility" in requiring such evidence and it should prevent the abuse of seeking further evidence for some other purpose (eg unduly pressurising a defendant or seeking ammunition for a contempt application).

The claimants had sought to argue that it is implied into every disclosure order that the defendant must "make all reasonable enquiries". Hildyard J held that although the defendant must take reasonable steps to investigate the truth of his answers, there is no requirement that he make enquiries of persons in relation to assets in which he says he has no interest. As to whether the defendant's obligation of disclosure can be delegated (eg to his solicitors), it was held that: "In a complex case, where the process of disclosure involves detailed investigations of corporate and/or trust structures and interests of an indirect or derivative nature, as well as more obvious and easily ascertainable assets, a measure of delegation as regards the enquiries is almost inevitable. However, the obligation of disclosure remains personal; and a casual approach, even if honest, will not suffice".

COMMENT: Although it is helpful to have a list of factors that the court will take into account on such applications, it might be noted that some of these factors cannot be assessed by the claimant in advance and hence it will be difficult to predict whether its costs will be awarded.

Cole v Howlett

The test for varying a final order

The claimant applied to vary an order. The defendant sought to argue that it is not possible to vary a final order. That argument was rejected by Smith J. The power to vary or revoke an order is contained in CPR r3.1(7) and there is no restriction in that rule on the type of order which can be varied or revoked. In any event, the judge found that the order in issue in this case had not been final.

The judge concluded that the court has a very wide discretion under CPR r3.1(7). Contrary to prior caselaw, he held that there is no essential requirement that the applicant establish some material change of circumstances since the order was made (although that might generally be required by the court). In general, though, the court will not allow a party to re-run a previous hearing on precisely the same material. Furthermore, a court will generally be less favourably inclined to consider a review of a final decision.

Taking into account all the circumstances of this case, the application was granted.

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.