UK: (Re)insurance Weekly Update 32- 2016

Last Updated: 20 September 2016
Article by Nigel Brook

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

This Week's Caselaw

Wave Lending v Batra: Restoring Part 20 claim and scope of the Third Parties (Rights Against Insurers) Act 2010

The claimant and defendant in these proceedings reached a settlement. The defendant stayed the Part 20 proceedings against his former solicitors and six years later sought to restore those proceedings, with a view to pursuing the solicitors' professional indemnity (PI) insurers. The solicitors had gone into liquidation and their PI insurers had declined cover (and were subsequently also placed in administration, although they continued to be active in respect of existing claims). An order was made by the court requiring the defendant to file and serve on the solicitors' liquidator and their PI insurers a witness statement which addressed the defendant's delay in seeking to restore the proceedings. Permission was also give to join the insurers as a party to the application, pursuant to the Third Parties (Rights Against Insurers) Act 2010.

Accordingly, the court proceeded on the basis that the 2010 Act was already in force. However, in this decision, Chief Master Marsh confirmed that that had been wrong, the 2010 Act not having come into force until 1st August 2016. Since the solicitors' insolvency and the incurrence of a liability had both occurred prior to that date, the 1930 Act continued to apply and so the defendant should first have obtained a judgment against the solicitors.

When the defendant had failed to provide an explanation for the delay, an unless order had been made. He had failed to comply with that unless order and so his application was dismissed and the Part 20 claim struck out.

COMMENT: Although the issue was not the subject of this decision, this judgment confirms the position regarding the 2010 Act (which the 2010 Act itself provides): If the insured became insolvent and incurred liability prior to 1 August, the 1930 Act applies. If the insured became insolvent prior to 1 August but incurred the liability after 1 August, the 2010 Act applies. If the insured incurred a liability but only became insolvent post 1 August, the 2010 Act applies.

O'Hare v Coutts: Judge considers issues of evidence where witness not called at trial/contemporaneous notes

In this professional negligence claim, the relevant financial adviser who had acted for the defendant was not called to give evidence (on the basis that he was too busy), although the claimant was. The adviser's contemporaneous notes were admissible hearsay evidence. The defendant argued that its evidence should be preferred because there was no reason to suppose that the adviser had not been called because his evidence was unreliable and, in a commercial context, contemporary evidence should normally be treated as more reliable than self-serving oral testimony (see Gestmin v Credit Suisse [2013]).

Kerr J held that, although the adviser had clearly been a pivotal witness of fact (who, if not called "would plainly be the Banquo's ghost at the feast"), there had been no procedural failure on the part of the defendant in not calling him. Accordingly, no adverse inference could be drawn: "Notice of objection to [the notes] being admitted in evidence was not given. If it had been, the court might have required [the adviser's] presence for the purpose of cross-examination as a condition of them being admitted in evidence". Nor was there any obligation on the defendant to serve a witness summary (CPR r3.9 permits, but does not oblige, a party to apply for permission to serve a witness summary where it is unable to obtain a statement from a witness it wishes to call).

However, contemporary evidence is not always to be preferred and it could not be said here that the claimant's evidence contradicting them must invariably be rejected.

The judge did not accept that the claimant could have called the adviser as a witness just as much as the defendant: the reasonable expectation is that a witness will be called by the party against whom there is a case for the witness to answer. Furthermore, his evidence had been crucial for the defendant. Nor was it a defence for the defendant to say that it did not wish to call the adviser "blind".

Countess of Caledon v Commissioner of Police for the Metropolis: Judge considers test for an application for a Norwich Pharmacal order

There has been some judicial debate recently about the appropriate test for a Norwich Pharmacal order ("NPO"), where disclosure is sought from a non-party before proceedings have started. The traditional view is that the respondent must be shown to have been "mixed-up" in wrong-doing (whether innocently or not), so as to facilitate that wrongdoing. However, in Various Claimants v NGN (see Weekly Update 27/13), Mann J potentially widened the scope for making a NPO order by including those who have gained information about wrong-doing after the event but have had no involvement in the commission of the wrongdoing (in that case, the police). Accordingly, it was held that someone other than a "mere witness" can be made the subject of a NPO. However, in a subsequent case, Hilton v D IV LLP (see Weekly Update 2/15), in which a NPO was sought against solicitors, the judge again referred to the need to show that the respondent has facilitated the wrongdoing.

In this case, the applicant also sought a NPO against the police. Slade J was not required to decide the point (as she had already found that the applicant did not have a cause of action giving rise to a potential claim on the basis of which disclosure was sought). Nevertheless, she went on to consider what the position would have been had such a cause of action existed. She was prepared to adopt the test set out by Mann J in Various Claimants. However, she distinguished this case from Various Claimants on the basis that the alleged wrongdoing here was not directed against the applicant herself. Furthermore, information which had been provided to the applicant by the police had not been given as a result of an actual or perceived obligation to the applicant.

Campbell v Campbell: Costs recoverable by a litigant in person

Chief Master Marsh was required to decide various issues at a costs management hearing. The claimant had originally instructed solicitors, but had then become a litigant in person. His barrister continued to represent him through the Bar Public Direct Access Scheme. He also received assistance from a Jersey firm of lawyers, who intend to instruct a junior barrister who is not authorised under the Direct Access scheme (and so cannot accept instructions directly from the claimant).

The defendant had been ordered to pay the claimant's costs in relation to an earlier matter. A deputy judge had earlier ruled that services provided by a lawyer qualified in another jurisdiction did not constitute "legal services" under CPR r46.5 and so the Jersey lawyers' fees were not recoverable by the claimant. Chief Master Marsh has now held as follows:

(1) Although a litigant in person is not required to file and serve a costs budget, he/she can do so if he/she wishes, and the court can make a costs management order in relation to that budget: "Indeed, in a case in which a litigant in person is likely to be seeking a substantial costs order, whether because there will be fees of counsel under the Direct Access scheme or otherwise, it may well be desirable to do so".

(2) If junior counsel was lawfully instructed to provide legal services, the claimant would be entitled to recover the amount he has reasonably paid for them (even if counsel was instructed by a foreign lawyer).

Smith v Lancashire Teaching Hospitals: Judge rules that there is no breach of human rights because co-habitees cannot claim under the Fatal Accidents Act 1976

The Fatal Accidents Act 1976 requires a tortfeasor who is liable for death to pay dependency and bereavement damages to people who fall within certain categories of relationship with the deceased. Dependency damages can be claimed by a spouse, civil partner or a co-habitee who has lived with the deceased as a spouse or civil partner for at least two years as at the date of death ("2 year + cohabitee"). However, bereavement damages are not payable to 2 year + cohabitees. It was argued that this was a breach of the European Convention of Human Rights (specifically, Article 8 (right to respect for private and family life) and Article 14 (prohibition of discrimination)).

That argument was rejected by Edis J, who found that the complaint did not achieve the level of serious impact required to put it within the ambit of Article 8. Furthermore, the absence of a right to compensation for her grief was said to be only tenuously linked to respect for her family life.

(Re)insurance Weekly Update 32- 2016

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