UK: (Re)insurance Weekly Update 10- 2017

Last Updated: 29 March 2017
Article by Nigel Brook

This Week's Caselaw

RBS Rights Issue Litigation: Judge considers ordering disclosure third party funders' details/insurance arrangements ahead of security for costs application

http://www.bailii.org/ew/cases/EWHC/Ch/2017/463.html

The defendants' costs in this case (which is the subject of a Group Litigation Order) have so far exceeded £100 million. They sought disclosure of the names of the claimants' commercial funders and details of any ATE insurance in advance of a threatened application for security for costs, when a trial is imminent. The claimants argued that the defendants should have a settled intention to apply for security for costs and have some realistic prospect of success in such application. Hildyard J held as follows:

(1) Information about the funders should be ordered.

There was no dispute that the claimants were being financed by commercial third party funders and those funders had a measure of control over and/or prospect of benefit from the proceedings. It is clear that the court has jurisdiction to order disclosure about third party funders. The judge rejected an argument that, in order to succeed, the defendants should have unequivocally determined to bring an application for security for costs once the details are revealed: "I agree, however, that the applicant must, at least, demonstrate that its putative application for security is a real possibility on realistic grounds, and not one simply posited as a possibility for some tactical purpose without any real intention of pursuing it".

The judge went on to hold that: "In my view, the critical question for present purposes is whether, even if in other circumstances security might be ordered, were an application to be made now, it is already clear beyond sensible argument that an order (a) would not provide any fair, real choice to the respondents to it; and (b) cannot properly be accommodated within the existing trial timetable without unjust disruption to the Claimants. This is a high hurdle". On the facts of the case, it could not be said that the funders would necessarily be confronted unfairly with "an unreal choice" (as to whether to put up security and continue with their action or withdraw the claim), notwithstanding the lateness of the application. In any event, it was only information, and not security, which was being sought at this stage.

(2) However, information about the ATE insurance policy should not be ordered.

Although there is conflicting prior caselaw on the point, the judge relied on XYZ v Various Claimants (PIP Breast Implant Litigation) (see Weekly update 43/13) to hold that the court does have power under CPR r3.1 (case management powers) to order disclosure of an ATE policy when that disclosure is necessary to enable the court proportionately and efficiently to exercise its case management function. Although there were various factors which made the ATE policy in this case potentially relevant in the context of case management (eg the claimants had previously relied on the ATE cover which they asserted was in place in order to encourage the court to make a GLO), the judge declined to exercise his discretion to order disclosure. That was because "the case management characterisation and rationale is still ancillary to enforcement; and the true or at least primary objective is demonstrated by the form of order sought, which is premised not on the documents being needed for case management purposes, but only that there are efficiencies in making the Claimants determine now their defence to an uncertain application for security which may not be pursued anyway and further or alternatively may be demonstrated (by reference, for example, to the position of the funders) to be unwarranted. I do not think it would be right to exercise case management powers to put the Claimants to an election in respect of a potential application for security for costs to which there may well be other answers, and to which the ATE policy may not be a complete answer anyway".

CPR r18 provides that the court may order a party to clarify "any matter which is in dispute in the proceedings". In XYZ, it was concluded that there was no jurisdiction under CPR r18 to order disclosure of a party's insurance arrangements ("The insurance position of the defendant is not a matter in dispute in these proceedings"). Here, Hildyard J agreed that an ATE policy is unlikely to be disclosable under CPR r18 but held the court's power to order disclosure is not excluded where that is expedient and necessary for the purposes of case management: "for example, where the ATE policy has been deployed in the course of the proceedings whereby to influence or impact on a decision (procedural or otherwise) such as it has been in the present case". However, for the reasons given above, the judge declined to exercise his discretion to grant the order.

Finally, the judge also rejected an argument that an ATE policy is privileged from disclosure because the policy is taken out for the dominant purpose of conducting litigation and/or it is likely to reflect legal advice given as to prospects and tactics: "In my view, it is unlikely that privilege attaches to an ATE policy as such on either ground (litigation or advice), except to the extent .... that parts of a policy (such as, possibly, the amount of premium..) may attract legal advice privilege and require redaction on the basis that the relevant part might allow the reader to work out what legal advice had been given".

COMMENT: The judge's comments about XYZ in relation to CPR r18 are interesting, especially given the difficulties of convincing a court to exercise its discretion under CPR r3.1. Prior to that decision, it had been held in Harcourt v Griffin (see Weekly Update 32/07), that CPR r18 was wide enough to cover the provision of information regarding the defendant's insurance cover, but the opposite view was reached in West London Pipeline v Total (see Weekly Update 24/08). The issue has not yet come before the Court of Appeal, though.

McBride v UK Insurance: Court of Appeal determines how to calculate the base hire rate for a car where the credit hire company provided a nil excess

http://www.bailii.org/ew/cases/EWCA/Civ/2017/144.html

This Court of Appeal decision is the latest in the long-running saga between the motor insurance market and credit hire companies. Earlier cases have established the following principles: (1) An innocent party must mitigate his loss eg by hiring a replacement vehicle; (2) He will be able to recover the cost of a replacement vehicle as damages; (3) In general, he can recover the cost of hiring the replacement vehicle on credit hire terms; (4) However, if his financial circumstances are such that he did not need to use credit, his damages will be only the basic hire rate of the vehicle. In Stevens v Equity Syndicate Management (see Weekly Update 09/15), the Court of Appeal held that a reasonable approximation of the basic hire rate will be the lowest reasonable rate quoted by a mainstream supplier for the hire of a vehicle of the kind actually hired by the claimant to a person such as the claimant.

In this case, the credit hire company provided a nil excess to the claimant (who, on the evidence, had a low excess on his own car insurance and always reduced the excess to nil when he hired a car), at a cost of £10 per day. However, none of the mainstream suppliers used to find the basic hire rate provided a nil excess (and those with the lowest daily hire rate had excesses of £2,000). The appellants argued that the judge ought to have allowed the claimant to recover the credit hire rate in full in such circumstances. That argument was rejected by the Court of Appeal.

The Court of Appeal rejected an argument that Stevens had been wrongly decided and held that it was correct to take the lowest reasonable rate of a mainstream supplier. It also rejected the argument that the full credit hire rate should have been recoverable here: "in my judgment, where a nil excess is not available from car hire companies, the correct approach is to treat the nil excess separately from the comparison exercise between the default credit hire rate and the basic hire rate with an excess. It will almost invariably be the case that it was reasonable for the claimant to seek a nil excess ... and, on that hypothesis, the only question for the Court will be how much should be recoverable as the cost of purchasing a nil excess". On the facts of the case, the only viable nil excess cover on offer was that provided by the credit hire company and the Court of Appeal allowed an upwards adjustment of the damages recoverable to reflect the cost of the nil excess ie £10 per day plus VAT.

Car Giant v London Borough of Hammersmith: Whether defendant entitled to indemnity costs after beating its Part 36 offer because claimant slow to mediate

http://www.bailii.org/ew/cases/EWHC/TCC/2017/464.html

The claimant failed to better the defendant's Part 36 offer at trial. Unlike the position for claimant Part 36 offers, defendants are not presumed to be entitled to indemnity costs from the date of expiry of the relevant period for their Part 36 offers. However, the court does have a discretion to order indemnity costs under CPR r44. It has previously been held that it might be appropriate to order indemnity costs because of an unreasonable refusal to engage in mediation. In this case, it was argued that there had been an unreasonable delay by the claimant in agreeing to mediate or take part in some form of ADR. The delay was from May 2015 to October 2016.

Furst QC held that "a court should be slow to conclude that this delay is unreasonable or that, if it is, it would justify an order for indemnity costs". That was because it could not be said that mediation in May 2015 would have been successful. Furthermore, the courts "should be slow to criticise a party's behaviour where decisions such as when to mediate are matters of tactical importance where different views may legitimately be held. In this case [the claimant] took the view that mediation was more likely to succeed when the experts' views had been fully set out. That is a perfectly possible point of view". A failure to accept a defendant's Part 36 offer also cannot in itself justify indemnity costs.

Accordingly, the defendant's costs should be assessed on the standard basis.

Marathon Asset Management v Seddon: Court considers interest to be awarded after defendant bettered its Part 36 offer

http://www.bailii.org/ew/cases/EWHC/Comm/2017/479.html

The claimant in this case failed to better the defendant's Part 36 offer at trial. Under Part 36, the defendant is entitled to its costs from the date on which the relevant period expired and interest on those costs. Leggatt J rejected an argument that the defendant was entitled to an enhanced rate of interest and held that, in the absence of evidence supporting a different rate, the appropriate measure of a commercial rate of interest in current conditions was 2% above the Bank of England base rate. He also felt that the power to award interest under Part 36 was now "effectively otiose" because courts routinely use their general powers under CPR r44.2(6)(g) to order interest to be paid on costs "from or until a certain date, including a date before judgment", usually from the date on which those costs were incurred (ie payment to the winning party's solicitors).

Symbion Power v Venco: Judge warns against party-appointed arbitrator communicating only with the party which appointed him

http://www.bailii.org/ew/cases/EWHC/TCC/2017/348.html

The claimant unsuccessfully challenged an award under section 68 of the Arbitration Act 1996. Jefford J then considered whether, had she had accepted the challenge, she ought to have set aside the award (as the claimant sought), rather than have remitted it to the tribunal. The claimant argued that it would not be fair to remit in this case because, after the tribunal had been constituted, the claimant-appointed arbitrator had written a confidential email to the claimant's counsel complaining about the conduct of the chairman (who had been appointed by the two party-nominated arbitrators).

The judge rejected the argument that it would be inappropriate to remit the award after the email came to the chairman's notice. She said that although it would have created "a somewhat awkward working environment", that was something that experienced, professional people could deal with.

Although the argument was not pleaded, she went on to express her view that the email could have given rise to an appearance of bias and a breach of the arbitrator's duty to act fairly and impartially: "The party-appointed arbitrators patently do not represent the party that appointed them .. Any communication by one arbitrator with one party which concerns the arbitration may give rise to concerns that that arbitrator is not acting fairly or impartially for the simple reason that it creates the impression of a close relationship between the arbitrator and the party and raises the spectre of other such communications. Requiring the communication to be kept confidential does not remedy the problem: if anything, it highlights the arbitrator's awareness that this is communication he should not be having. Whether in any individual case there is the appearance of bias will, of course, turn on its particular facts but I have no doubt that such communications between one arbitrator and one party should be avoided".

Deutsche Bank v Sebastian Holdings: Judge rules permission to serve out not required where judgment debtor served with order under CPR r71

http://www.bailii.org/ew/cases/EWHC/Comm/2017/459.html

The defendant, a judgment debtor, breached an order made pursuant to CPR r71 to provide information. The claimant applied for a committal order and (as reported in Weekly Update 46/16) Teare J held that an order for committal pursuant to CPR r71.8 can be sought notwithstanding that the respondent has left the jurisdiction but that here the applicant could not bring itself within one of the jurisdictional gateways of PD 6B.

The claimant then argued that permission to serve out was not required. Teare J has now accepted that argument, on the basis that the English court already had substantive jurisdiction over the respondent because he had been personally served with the CPR r71 order. The order for committal was held to be incidental to the CPR r71 order: "As a matter of principle where jurisdiction in respect of a claim or an order is established over a person the jurisdiction which is established must include, in my judgment, jurisdiction in respect of matters which are incidental to that claim or order".

An application to commit for contempt must be served personally (in this case, in Monaco). The respondent refused to agree a time and place when he could be personally served. The judge accepted that he was not obliged to do but held that "That is some evidence that he is unwilling to be served personally and that he may well take steps to avoid service. When that evidence is considered against the background of his conduct in this litigation ... I consider it very likely (notwithstanding that [the respondent] has paid the costs awarded against him and attended court pursuant to the Part 71 order) that he will take steps to avoid personal service in Monaco". Accordingly, there were special circumstances justifying an order for service by alternative means (namely, by service on his solicitors).

Hong Kong caselaw

Nokia v TCT Mobile: Hong Kong Court of Appeal accepts the principle of contractual estoppel for the first time

Contractual estoppel arises when contracting parties have, in their contract, agreed that a specified state of affairs is to form the basis on which they are contracting or is to be taken, for the purposes of the contract, to exist. The effect of "contractual estoppel" is that it precludes a party to the contract from alleging that the actual facts are inconsistent with the state of affairs so specified in the contract. Although the principle is well-established under English law, it had only been accepted obiter in Hong Kong (in the case of DBS Bank v San-Hot Industrial Co Ltd [2013]) prior to this case. The Court of Appeal has now accepted that "there are sound reasons for it to be adopted in Hong Kong, as it would promote certainty in contractual relationships, and reduce the scope for disagreement and disputes in the working out of the contract".

(Re)insurance Weekly Update 10- 2017

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.