UK: (Re)Insurance Weekly Update 37 - 2015

Last Updated: 23 October 2015
Article by Nigel Brook

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

This week's caselaw

Involnert Management v Aprilgrange

When does interest start to run when costs are to be assessed?

http://www.bailii.org/ew/cases/EWHC/Comm/2015/2834.html

Clyde & Co (Andrew Blair and Richard Edwards) for second third party

The claimant was ordered to pay the second third party's costs, to be assessed if not agreed. The basic rule is that interest runs from the date judgment is given. Where damages are to be assessed, interest begins to run from the date when damages are finally assessed or agreed. However, prior caselaw has held that where costs are to be assessed, interest will run from the date of the costs order and not the later assessment date. CPR r 40.8(1), though, gives the court a discretion to order interest to run from a later date than the date of the costs order. Given that interest on judgment debts is still 8% per annum, and so well above the commercial rate of interest which is generally 2.5%, this is a matter of some importance where large sums have been spent on costs.

Leggatt J ruled in this case that interest on costs should run from three months after the date of the costs order. He held as follows:

  1. The default position is that interest on costs runs from the date of the costs order.
  2. The discretion to order interest to run from a different date should be exercised in accordance with the overriding objective of dealing with costs justly. There is no requirement that the case have unusual features in order to justify a later date.
  3. The date from which interest runs should not be deferred just because the statutory rate of interest is higher than commercial rates of interest.
  4. However, it is not just to make an order under which interest begins to run before the paying party could reasonably be expected to pay the debt. Where, as here, the court has ordered a suitable interim payment to be made on account of costs, it is not reasonable to expect the paying party to pay the balance of the debt until it has had a fair opportunity to decide what sums it accepts are properly payable.
  5. In order to provide certainty, the court should apply a reasonable objective benchmark – namely, the period prescribed by the rules of court for commencing detailed assessment proceedings, ie 3 months after the date of the costs order. Accordingly, interest on costs should generally start to run from that date (here, the judge also ordered the claimant to pay the second third party interest at the rate of Bank of England base rate plus 2% from the dates when the costs were incurred up until three months after the costs order was made).

Michael Wilson v Emmott

The Court of Appeal considers freezing orders and whether a payment was in the "ordinary course of business"

http://www.bailii.org/ew/cases/EWCA/Civ/2015/1028.html

A freezing order made against the appellant contained the usual exception allowing assets to be dealt with, or disposed of, "in the ordinary and proper course of business". The appellant made two payments to associated companies – one to repay part of a loan and one to cover outstanding rent arrears. At first instance the judge held that the payments breached the freezing order and the appellant appealed.

The Court of Appeal has confirmed the following:

  1. It is the course of business, and not the payments, which must be "ordinary".
  2. It is not helpful to substitute "ordinary course of business" with other synonyms like "routine" or "recurring". The fact that a payment does not happen every day does not stop it being made in the ordinary course of business.
  3. Just because a payment is not dissipatory in nature does not make it one in the ordinary course of business.
  4. The exception is not restricted to payments to trade creditors.
  5. However, Gloster LJ stressed that this issue is highly fact-sensitive.

In relation to the payments made in this case, the Court of Appeal held that the judge had been wrong to focus on the amount of the payment: "although the amount of the payment may well be relevant where what is in issue is discretionary spending or investment, it is of much less significance when the repayment in question is obligatory and related to liabilities which long pre-dated the making of the freezing order. In such a case it is the nature of the obligation which is more weighty". It did not matter that the loan repayment had been particularly large since earlier repayments had totalled amounts in excess of that figure. Nor did it matter that there had been a lengthy gap since the last payment, as there had been similar time gaps before. Also, the appellant had not repaid the entire loan. In relation to the rent payment, arrears had been allowed to accumulate in the past this liability pre-dated the award in favour of the respondent. Accordingly, the appeal was allowed.

Hertel v Saunders

Whether or not an offer was a Part 36 offer

http://www.bailii.org/ew/cases/EWHC/Ch/2015/2848.html

An offer was made by the defendant in February 2015 and it was accepted by the claimant. The issue in this case was whether that offer was a valid Part 36 offer or not.

At the time of the offer, CPR r36.2(2) provided that a Part 36 offer must, inter alia:

"(c) specify a period of not less than 21 days within which the defendant will be liable for the claimant's costs in accordance with rule 36.10 if the offer is accepted; and

(d) state whether it relates to the whole of the claim or to part of it or to an issue that arises in it and if so which part or issue."

(The Part 36 rules were modified in April 2015 but, other than a change in numbering, the above rule was not altered.)

The offer in issue in this case was headed "Part 36 offer". However, Morgan J held that it was not in fact a valid Part 36 offer because it did not relate to a part of the claim (since that part was only added after the date of the offer). An argument was raised that, since a Part 36 offer can be made at any time (including before the commencement of proceedings), CPR r36.2(2)(d) should be read as including references to a claim which has not yet been brought but which is subsequently brought after the offer. That argument was rejected by the judge who said that: "As Part 36 is a highly prescriptive and self-contained code, it does not seem to me to be right to add in further provisions on the basis that they would have an analogous effect to the express provisions of Part 36". Accordingly, this was not a valid Part 36 offer as it did not comply with CPR r36.2(2)(d).

However, had the judge been required to decide the point, he would have held that there had been no breach of 36.2(2)(c) in this case.

The offer had effectively said to the claimant that it was up to the claimant whether or not to continue with the balance of the claim (to which the offer did not relate). If the offer was a valid Part 36 offer and the claimant had decided to abandon the rest of the claim, it would be entitled to its costs of the proceedings. If it decided to continue with the balance of the claim after accepting the offer, costs would be decided by the court later on. Here, there had been a reference to 21 days and the offer had stated that the claimant would be entitled to its costs of the part of the claim being introduced by the amendment (to which the offer related), but the defendant had not said what the costs consequences would be if the claimant abandoned the rest of its claim. That did not matter, because "r. 36.2(2)(c) does not require a Part 36 letter to explain the costs consequences of an acceptance; instead it requires the offeror to specify the period within which the offeror will be liable for the offeree's costs in accordance with r. 36.10 if the offer were accepted".

Riskstop Consulting v HMRC

Whether a party providing risk evaluation/improvement services is an insurance agent for tax purposes

https://www.lawtel.com/UK/FullText/AC0147860FTT(Tax).pdf

The appellant claimed that the fees which it received for services which it provided were exempt from VAT on the basis that they were services performed by "insurance agents".

The appellant prepared questionnaire surveys (in cooperation with the insurer) to send to insureds to form a view on the insurance risk being presented. The appellant would analyse the questionnaire and send a report to the insurer. The appellant would then liaise directly with the insured to monitor compliance and help it satisfy any Risk Improvement Requirements adopted by an insurer as a condition of the quotation, within certain deadlines. The appellant's fees were paid by the insurer.

The tribunal held that the appellant was not an insurance agent. It played no part in finding prospects and introducing them to insurers and it did not bring insurance products to the attention of potential insureds.

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
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (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 www.mondaq.com

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 Mondaq.com’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.

Disclaimer

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.

Registration

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 unsubscribe@mondaq.com 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.

Cookies

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.

Links

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.

Mail-A-Friend

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.

Security

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 webmaster@mondaq.com.

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 EditorialAdvisor@mondaq.com.

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 enquiries@mondaq.com.

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