UK: (Re)insurance Weekly Update 24- 2018

Last Updated: 12 July 2018
Article by Nigel Brook
Most Read Contributor in UK, November 2018

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

Dr B v The General Medical Council: Court of Appeal allows data access request where there are competing privacy interests

http://www.bailii.org/ew/cases/EWCA/Civ/2018/1497.html

The first instance decision in this case was reported in Weekly Update 34/16. A patient alleged that the claimant GP had misdiagnosed him. He submitted a subject access request under section 7 of the Data Protection Act 1998 to the General Medical Council ("CMC"). The claimant argued that an expert report obtained by the GMC for the purpose of investigating the patient's complaint should not be disclosed to the patient (even though it contained personal data relating to the patient) as this would breach his right of privacy as a data subject. Accordingly, the case involved the competing privacy rights of the patient and the GP in the personal data contained in the report ("mixed personal data"). The GMC held that the report should be disclosed but the judge at first instance in this case held that the patient was not entitled to disclosure.

By a majority of 3:2 the Court of Appeal has now allowed the appeal from that decision and ordered disclosure of the report. It held as follows:

(1) The judge had erred in proceeding on the basis that there is a rebuttable presumption against disclosure in a "mixed personal data" case.

(2) By a majority, it was also held that the judge had erred in holding that, where the sole or dominant purpose of the request is to obtain information for the purpose of litigation, that is a weighty factor in favour of refusal. As Sales LJ put it: "In my view, there is no general principle that the interests of the requester, when balanced against the interests of the objector, should be treated as devalued by reason of such motivation. The general position is that the rights of subject access to personal data under Article 12 of the Directive and section 7 of the DPA are not dependent on appropriate motivation on the part of the requester". The patient was not required to obtain access to the information via CPR r31 instead. Arden LJ agreed that, in the usual case, the fact that the person requesting data in a mixed data case might bring litigation should only be one factor to be weighed in the balance by the data controller. Thus, for example, where the person requesting data is a vexatious litigant, disclosure might be refused.

Network Rail v Williams & Anor: Court of Appeal rules on a private nuisance claim arising from encroachment of Japanese knotweed – of possible interest to liability insurers

http://www.bailii.org/ew/cases/EWCA/Civ/2018/1514.html

The claimants brought claims in private nuisance after Japanese knotweed spread from their neighbour's land onto their land. The Japanese knotweed had not caused any physical damage to the claimants' properties, or any change in the soil structure on their land. However, the value of properties affected by Japanese knotweed can be reduced.

The claimants presented their private nuisance claims in two ways: 1) an "encroachment claim" (ie the neighbour was liable because the Japanese knotweed had spread to their land (even though there was no damage); and 2) a "quiet enjoyment/loss of amenity claim". The recorder at first instance held that the encroachment claim failed, because of the lack of physical damage to the claimant's property, but the quiet enjoyment claim succeeded. On appeal, the Court of Appeal has now held as follows:

(1) Although actions for nuisance are sometimes broken down into different categories, these are only examples of a violation of property rights: "The difficulty with any rigid categorisation is that it may not easily accommodate possible examples of nuisance in new social conditions or may undermine a proper analysis of factual situations which have aspects of more than one category but do not fall squarely within any one category, having regard to existing case law".

(2) The proposition that damage is always an essential requirement of the cause of action for nuisance "must be treated with considerable caution". For nuisance from encroachment by an artificial object "the better view may actually be that damage is formally required but damage is always presumed".

(3) Furthermore, "The purpose of the tort of nuisance is not to protect the value of property as an investment or a financial asset. Its purpose is to protect the owner of land (or a person entitled to exclusive possession) in their use and enjoyment of the land as such as a facet of the right of ownership or right to exclusive possession". Accordingly, the recorder had erred in finding that the pure economic loss which the claimants had suffered because of the Japanese knotweed (as a result of the diminution in the value of their property) gave rise to actionable private nuisance.

(4) However, nuisance was committed when the Japanese knotweed encroached onto the claimants' properties as it had diminished the utility and amenity of the claimants' properties.

AAA v Unilver: Court of Appeal holds that English holding company does not owe a duty of care to the employees of its subsidiary Kenyan company

http://www.bailii.org/ew/cases/EWCA/Civ/2018/1532.html

The first instance decision in this case was reported in Weekly Update 8/17. The Kenyan employees of a Kenyan company brought a claim against the English ultimate holding company of the Kenyan company (as well as the Kenyan company). The English holding company applied for a stay and argued that the claimants had no arguable claim against either company.

The 3-stage test for establishing a duty of care is foreseeability, proximity and reasonableness. At first instance, the judge held that the damage suffered by the appellants (from third parties) was not foreseeable and nor would it be reasonable to impose a duty of care. However, she did hold, with hesitation, that there was a sufficient degree of connection between the activities of the holding company and the damage suffered by the employees to satisfy the test of proximity. The appeal from that finding has now been unanimously allowed by the Court of Appeal.

Sales LJ pointed out that there is no special doctrine in the law of tort in relation to the responsibility of a parent company in relation to the activities of its subsidiary, and the same principles which apply to all third parties (such as a consultant giving advice to the subsidiary) will apply: "Helpful guidance as to relevant considerations was given in Chandler v Cape Plc; but that case did not lay down a separate test, distinct from general principle, for the imposition of a duty of care in relation to a parent company".

However, he did recognise that, on the facts of a particular case, it may be that a parent company has greater scope to intervene in the affairs of its subsidiary than an ordinary third party. The cases where this might arise will usually fall into 2 categories: 1) where the parent has in substance taken over the management of the relevant activity of the subsidiary, in place of, or jointly with, the subsidiary's own management; and 2) where the parent company has given relevant advice to the subsidiary about how it should manage a particular risk.

Here, the management of the affairs of the subsidiary was conducted by the subsidiary's management and the evidence did not show that the subsidiary had received relevant advice from the holding company.

COMMENT: This case might be contrasted with that of Chandler v Cape (see Weekly Update 14/12), where the parent company was held to owe a duty of care to its subsidiary's employees, in part because the parent company was said to have superior medical knowledge on the link between asbestos and lung disease and so knew, or ought to have known, that the subsidiary or its employees would rely on that superior knowledge. No such superior knowledge could be shown here.

Glaxo Wellcome v Sandoz: Master orders explanation of deletion of platform prior to disclosure and considers ordering response to a notice to admit

http://www.bailii.org/ew/cases/EWHC/Ch/2018/1626.html

The claimants sought three orders from the court following disclosure:

(1) An order requiring the defendant to explain why a platform set up to share information between the defendants was deleted about a year before disclosure took place. The claimants are concerned that this deletion took place when the defendants were on notice of an intention to join them to the litigation. The defendants' solicitor had provided a witness statement regarding the destruction of the platform but Master Marsh said that the impression he had is that a failure to make reference to the platform "has not led to what I would regard as an appropriate level of contrition". He agreed to make the order because the court needs to know whether a serious error had occurred and because "I would have expected the evidence that relates to the destruction of a platform (which potentially contained disclosable material) to have been explained not second-hand by a solicitor on instructions, but by a person who has first-hand knowledge of the events and who can say that he or she, and the relevant entities, were unaware of the need to preserve the platform".

(2) An order requiring the defendants to respond to a notice of admission served by the claimants. Master Marsh noted that "A notice to admit facts is a convenient procedural device and has the potential to save cost because a party need not go to the expense of proving uncontroversial detail. The rule, however, contains no sanction for a refusal to agree facts. It would not be common for the court to seek to apply any sanction to the refusal to admit facts other than a costs sanction after the event under CPR 42". However, he held that the court does have a discretion to make the order being sought, although he did not intend to exercise it yet. If the parties are not able to "seek to work together in a collaborative way to the extent they feel possible after exchange of witness statements with a view to achieving clarity about the differences between them concerning the basic facts in which the dispute arises", then an order might be made in future.

(3) An order explaining which attachments which have been disclosed are merely contextual and which fall within the standard disclosure test. Unusually in this case, there had been no agreement between the parties as to whether complete families of documents, or only parent documents, would be disclosed (unless children of that parent document were also within the standard disclosure test). Accordingly, when disclosure was made, the claimants were unable to discern which documents that form part of a family of documents fell strictly within the standard disclosure test and, by contrast, which documents were merely provided for the purposes of context. Master Marsh agreed the requested order should be made: "It is not right that documents merely providing 'context' are disclosed, unless that is part of the court's order...the attachments must, if they are to be disclosed, fall strictly within the standard disclosure test".

Havlish v Islamic Republic of Iran: Judge makes order dispensing with service prospectively

http://www.bailii.org/ew/cases/EWHC/Comm/2018/1478.html

The claimants in this case are representatives or relatives of victims of the 11th September 2001 terrorist attacks in New York. They have obtained judgment in New York against the defendants, the Islamic Republic of Iran and other emanations of that State. They are seeking to register and enforce that judgment in England (as well as other countries), where it is believed the defendants have assets.

The claimants seek an order dispensing with service of the claim form (pursuant to CPR r6.16(1)) on the basis that they have received information from the British Embassy in Tehran that the Iranian Ministry of Foreign Affairs will not accept service in cases which it believes are against the interests of Iran. That information was initially sent to the FCO and no further attempt has been made to effect service.

Teare J accepted that an order under CPR r6.16 can be made prospectively. Reference was made to the recent case of Certain Underwriters at Lloyd's v The Syrian Arab Republic (see Weekly Update 09/18), in which the judge held that he would have made an order under CPR r6.16 if necessary, because it was an exceptional case (the Syrian Ministry of Foreign Affairs had also refused to accept delivery of the claim form). One factor which was said to be relevant in that case was that the proceedings were likely to have been brought to the attention of the defendants.

In this case, although the defendants were likely to know about the US judgment and that the claimants were seeking to enforce in countries where the defendants have assets, that did not mean that they knew about this particular case. However, the claimants were willing to give an undertaking to email and courier the claim form to the Iranian Ministry of Foreign affairs (and also to email the defendants' Luxembourg lawyers). As a result, the judge said that it was appropriate to dispense with service, because of the exceptional circumstances of the case.

Koza v Akcil: Frozen funds cannot be used to pay legal expenses of director where director has his own funds

http://www.bailii.org/ew/cases/EWHC/Ch/2018/1612.html

In Tidewater Marine v Phoenixtide Offshore (see Weekly Update 36/15), Males J confirmed that where a respondent has no other assets with which to fund the litigation, "the ordinary rule" is that it should be allowed to use the funds caught by a freezing order to finance its defence. However, it is possible to depart from that rule, in the interests of justice and so the court will consider whether the respondent has other assets to fund the litigation.

In this case, the freezing order against a company provided that the company would not dispose of, or deal with assets "other than in the ordinary and proper course of its business" and could spend "a reasonable sum on legal advice and representation, provided that the funds spent or liabilities incurred in this connection properly relate to legal advice and representation for the company's benefit". A director of the company wanted to use the company's frozen funds to pay for his defence to an extradition warrant (it was argued that retaining the director was in the interests of the company).

Morgan J held that "ordinary" in this context meant "one is looking at something which is much more like the established course of business rather than a fundamental departure from the established course of business". Furthermore, the order extended to legal advice or representation for someone (not necessarily the company) provided the funds were spent "properly". Here, though, the director of the company could fund his own defence and use of the company's funds would not be "proper" as the legal advice would not be for the company's benefit: it was primarily for the director's benefit.

Walton International v Verweij Fashion: Court sets aside notice of discontinuance because it would give claimant a "collateral advantage"

http://www.bailii.org/ew/cases/EWHC/Ch/2018/1608.html

The claimants served a notice of discontinuance of a part of their claim. The defendants complained that, as a result, the English court would be deprived of jurisdiction over its counterclaim in respect of that part of the litigation. The claimants sought to set aside the notice of discontinuance pursuant to CPR r38.4.

Prior caselaw has established that it is not essential to show that the discontinuance is an abuse of process. In this case, Arnold J applied the approach set out in Sheltam Rail v Mirambo Holdings (see Weekly Update 12/08) that a useful question to ask (as developed under the pre-CPR caselaw) is whether, if the permission of the court had been required to issue a notice of discontinuance, would that permission have been granted unconditionally? (However, the court should also consider the surrounding circumstances and what the claimant is attempting to achieve).

In this case, it was held that permission to issue a notice of discontinuance would not have been given unconditionally. The notice of discontinuance had been served on the eve of trial: "Thus most of the costs had been incurred, and the parties were about to commence battle". The judge would have required an undertaking that the claimants would not bring proceedings elsewhere in the EU in relation to the part of the claim which they wanted to discontinue here. However, the claimants refused to give that undertaking.

Although the claimants had claimed that their discontinuance was intended to simplify and streamline the issues for trial, the judge concluded that they wished to "shield" the issue from being determined by the English court. It would also force the defendant, "having got virtually to the door of this court with its counterclaim", to start all over again. That would give the claimants a "collateral advantage" and the notice of discontinuance should be set aside so that the English court could determine all the issues justly and at proportionate cost.

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.

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