The claimant insured sought to lift an automatic stay of his
proceedings against the defendant insurance company after the
insurer (a Gibraltar company) went into liquidation. The judge
refused to lift the stay on the basis that the insured's claim
did not pass the threshold of genuine arguability. The Court of
Appeal has now dismissed the appeal from that decision.
The liability policy taken out with the defendant in October
2009 provided cover in respect of a "claim" first made
during the policy period (or arising from circumstances notified
during the policy period). The policy provided that a claim meant
"a demand for, or an assertion of a right to, civil
compensation or civil damages or an intimation of an intention to
seek such compensation or damages".
In August 2010, the insured received a letter from a firm of
solicitors which demanded certain information and provided that if
that information was not received "we may issue protective
proceedings in order to protect our client's position as
regards limitation". It added that once the information was
received, the solicitors would consider whether a claim for
negligence could be brought.
The Court of Appeal agreed with the judge at first instance that
the solicitors' letter did not amount to a "claim".
It merely sought information in order to decide whether to bring a
claim. Nor did it exhibit an already-formed intention even to issue
a protective claim form (noting the use of the word
"may"). Further, if the solicitors had had sufficient
information to begin proceedings, they would not have needed to
issue protective proceedings (or seek further information).
Although the insured "might perhaps" have treated the
letter as a "circumstance" (ie a matter which may give
rise to a claim, which was the definition of
"circumstances" in the policy), he had chosen not to do
The Court of Appeal also rejected an argument that the
aggregation clause in the policy required a link to be made between
this "claim" and separate disciplinary proceedings which
were said to involve "similar acts or omissions in a series of
related matters". The aggregation clause did not relate to any
other part of the policy, including the part referring to which
defence costs would be covered under the policy.
COMMENT: This case follows the line adopted in ARC v
Brit (see Weekly Update 05/16). There, it may be recalled, the
insured had received a letter from the claimant's solicitors
reserving the claimant's rights and seeking an agreement of a
protocol for a swift and effective recovery of sums. Cooke J had
noted that "there is no formality required for such a demand
so long as it is in writing but there must be a demand". He
held that that letter had not amounted to a demand. Similarly here,
there was no demand for damages, nor intimation of an intention to
In the absence of an express policy term though, the definition
of a claim may be slightly more lax. In Robert Irving &
Burns v. Stone Staughton, LJ said that "in the
ordinary meaning of the English language the words "claims
made" indicate that there has been a communication by the
[third party] to the [insured] of some discontent which will, or
may, result in a remedy expected from the [insured]".
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