UK: (Re)insurance Weekly Update 43- 2016

Last Updated: 9 December 2016
Article by Nigel Brook
Most Read Contributor in UK, November 2017

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

This week's caselaw

Sahin v Hayward: Court of Appeal finds motor insurer not liable to cover liability incurred by insured for allowing a third party to drive her car without insurance

The claimant's car was damaged by another vehicle. That vehicle was being driven by someone who had no insurance. However, that vehicle was owned by a car hire company which had hired the car to the defendant. The defendant had given the uninsured driver of the vehicle permission to drive it, and the claimant obtained default judgment against her, for breach of section 143 of the Road Traffic Act 1988 ("the Act").

The car hire company and the defendant were both insured and the claimant argued that the insurer should meet the default judgment against the defendant. At first instance, it was held that the defendant's liability under section 143 was not a liability which was statutorily required to be covered under section 145 of the Act, and so the insurer was not liable to the claimant.

The claimant appealed and the Court of Appeal has now upheld the first instance decision.

Section 145 of the Act provides that a motor insurance policy must insure the insured (here, the defendant) in respect of any "liability which may be incurred by [her] respect of damage to property caused by, or arising out of, the use of the vehicle on the road". The key question was therefore whether permitting someone to drive a vehicle is "using" that vehicle on a road. The Court of Appeal held that it is not: "To my mind permitting the use of a vehicle is not the same as using the vehicle. Section 143 of the 1988 Act draws a clear distinction between the two ...It must follow that the liability of someone who permits another to use a vehicle without an insurance policy is not a liability which is itself required to be insured under section 145 and is not therefore a liability which an insurer is obliged to satisfy under section 151".

Furthermore, the terms of the policy did not cover this liability.

Kimathi v FCO: Court refuses application to cross-examine translators of witness statements

The defendant applied for permission to cross examine 11 translators who have translated the witness statements of the claimants. The purpose of the application was said to be so that the defendant and the court can understand the process by which the documents were created and make a judgment as to the reliability and accuracy of the documents in portraying the true account of the witness.

The claimants' lead solicitors had planned to prepare English statements first, checking the accuracy of the document by reading the English version back to the witness in the witness's own language and then correcting errors in the English version. As no native language statement had been taken from the witness, the claimants and defendant then agreed that checking the accuracy of the statement with the witness and producing a native version statement and correcting any errors in the English version was the most appropriate way to proceed.

Stewart J held that there was no entitlement of the defendant to cross-examine the translators under CPR r32. That rule allowed only a witness to be cross-examined. That rule does not require or permit a translator to file a witness statement.

Nor should permission be granted pursuant to the court's general management powers. Although the translators had not given their occupations, the name of their firm or, if they are employed, the name of their employer (as required by PD 32), those requirements could be met now, so there was no need to allow cross-examination instead. Furthermore, any discrepancies could have been put to the claimants when they gave their evidence.

The application was therefore refused.

Eaglesham v MoD: Judge criticises a party's disclosure exercise

The judge in this case refused the defendant's application to extend time for compliance with a disclosure "unless" order.

There had been various criticisms of the defendant's disclosure process:

(a) Documents were provided in a random order, with no explanation as to where they had come from, no explanation of the context in which they were prepared, and no explanation of the acronyms/abbreviations used in them. There has been no attempt by the defendant to give even a broad range of dates or details of where the undated documents were found or which department they came from; and

(b) Search terms which were not used in the first place (but were used later on) had been "so obviously likely to throw up potentially relevant documents".

The judge said that she was unimpressed by the litany of excuses put forward for non-compliance: "This is not a case, in my judgment, in which the volume of documentation generated by the searches could not have been foreseen and in which the delay has been caused by matters beyond the Defendant's control. I am not persuaded that the Defendant went about the searches in a sufficiently thorough manner to begin with".

Furthermore, the pressure of other work and demands on the time of staff was an insufficient excuse, since those factors were known at the time when the original estimate was given and were built into the supposedly "realistic" timetable advanced by the defendant: "If a team of six counsel was insufficient to carry out the filtering exercise in time, the Defendant could and should have instructed more. I am not persuaded that the time and effort involved in educating new team members would outweigh the efficiencies to be gained by bringing them on board if further human resources became necessary".

Holyoake v Candy: Security for costs application where earlier application was dropped/co-claimant's assets

The defendant applied for security for costs against the company claimant. It was undisputed that the claimant would be unable to meet the defendant's costs, if ordered to do so, and so CPR r 25.13(c) was satisfied. However, two defences were advanced by the claimant:

(1) This was the second time the application had been made, the first application having been withdrawn by the defendant, and so it was an abuse of process to pursue the application again.

Nugee HHJ acknowledged that prior authority on the abuse of process point was conflicting: some authorities have held that a material change of circumstances is needed, whereas others have held that the rule is not so strict for interlocutory matters and it should not matter if conclusive evidence had been available at the time of the first application. The judge found that he did not need to resolve this issue because, on the facts, the relevant material had not been available to the defendant at the time of the first application, because misleading information had been supplied by the claimant.

The judge did, however, also find that a reservation of rights given by the defendant at the time of the first application had not in itself entitled the defendant to bring the second application without showing good reason to do so. The earlier application had been withdrawn, rather than adjourned, and "Once however the application has been argued and a decision made, that is usually intended to govern the position until trial absent a sufficient change of circumstances".

(2) The claimant also argued that if the claim failed, the defendant would be able to obtain a costs order against the co-claimant, the owner of the claimant (as the co-claimant is an individual, CPR r25.13(c) did not apply and security could not be ordered against him).

Prior authority has established that if the co-claimant could be shown both to be liable for the same costs and a "good mark" for those costs, that is capable of being a good reason not to order security.

The judge did not accept that this was a reason not to grant security against the claimant here. There was considerable uncertainty as to the current value of the co-claimant's interest in certain property and, in any event, it would take some time to realise that asset. It is established that when deciding if CPR r25.13(c) applies, the relevant question is whether the claimant would be able to pay the defendant's costs within, usually, 14 or 28 days of the costs order: "A company that has illiquid assets and could pay in the end but is unable to pay with any high degree of promptness is within the wording of the rule ... The same must apply if the question is whether a co-claimant is a good mark, as the principle is that security need not be ordered against a company that is unable to pay if someone else will".

Accordingly, the claimant's defences failed and a security for costs order was made.

(Re)insurance Weekly Update 43- 2016

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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