Jones v Kaney Supreme Court abolishes expert witnesses' immunity from negligence claims by their clients
http://www.bailii.org/uk/cases/UKSC/2011/13.html
The appellant was injured in a road traffic accident. His solicitors instructed the respondent, a consultant clinical psychologist. In due course a district court ordered that the respondent meet with the expert retained by the other side and prepare a joint statement. That joint statement was damaging to the appellant's claim. It transpired that the respondent had signed the joint statement because she had felt under pressure and she had not agreed with the statement's conclusions. The district judge would not permit the appellant to change his expert and the appellant felt obliged to settle the case for less than would have been achieved had the respondent not signed the statement. The appellant's claim against the respondent for negligence was dismissed at first instance because of the long-standing principle that expert witnesses are immune from liability in negligence in relation to the performance of their duties in that capacity. However, since the issue raised a point of law of general public importance, the judge allowed the case to "leapfrog" to the Supreme Court.
By a majority of 5:2, the Supreme Court has allowed the appeal. The main reasons given by the majority for abolishing the immunity were as follows:
- Analogy with position for advocates. In Hall v Simons [2002], the House of Lords swept away the advocate's immunity from liability in negligence (both in court and out - but not their immunity from claims for defamation). However, in that case a distinction was drawn between advocates and expert witnesses. The Supreme Court has now held that that distinction is no longer tenable since both undertake a duty to provide services to the client.
- There was no basis for assuming that expert witnesses would be discouraged from providing their services or would not give full and frank evidence to the court if the immunity was removed (the so-called "chilling" factor). It was also not realistic to anticipate that they would become subject to vexatious claims. Lord Brown opined that the courts should be alert to protect expert witnesses against specious claims by disappointed litigants, "not to mention to stamp vigorously upon any sort of attempt to pressurise experts to adopt or alter opinions other than those genuinely held".
- Wasted costs orders and disciplinary proceedings can already be made against witnesses. There were therefore no longer any policy reasons for retaining the immunity.
Accordingly, expert witnesses are no longer immune from suit in relation to the evidence which they give in court or for the views which they express in anticipation of court proceedings. Witnesses of fact, however, remain immune from suit.
COMMENT: Despite the Supreme Court's assurances, this decision may well deter expert witnesses (such as underwriting experts) from acting, especially when the provision of expert evidence does not form the bulk of a practitioner's work. The position will be particularly difficult for jointly instructed experts, who owe duties to each of the parties who instruct them. As such, they might (as Lady Hale suggested in her dissenting opinion) be more vulnerable to claims because they are likely to disappoint at least one of those instructing them. PI underwriters may also now require additional information from professionals as to the amount of expert witness work they generally undertake and may consider an increase in premiums for those for whom this type of work forms a significant proportion of their activities.
Pine v DAS Legal Expenses
Legal expenses insurance and insured instructing barrister on
direct basis/claim for damages for breach of insurance policy
The claimant wished to instruct a barrister on a public access basis (ie without going through a solicitor) in order to defend a claim being brought against her. Her home and contents insurance policy included cover for legal expenses, and that cover was provided by DAS ("the insurer"). The policy provided that the insured was free to choose an "appointed representative" but that the insurer "may choose not to accept your [ie the insured's] choice, but only in exceptional circumstances". Regulation 6 of The Insurance Companies (Legal Expenses Insurance) Regulations 1999 provides that an insured shall be free to choose its lawyer. However, Seymour HHJ noted that the regulations do not appear to contemplate that the right to choose a lawyer might be denied by a legal expenses insurer in "exceptional circumstances". As a result, he was of the view that the "exceptional circumstances" would have to be very exceptional. He held as follows:
- It was a breach of the policy for the insurer to insist on the insured instructing the barrister through a solicitor. It did not matter that the insurer had "sound" reasons for wanting this (eg to have safeguards in place to ensure that the merits of the claim or defence are regularly and independently reviewed and the incurring of cost is regularly monitored). The insurer could not insist on the appointment of a solicitor as the insured's "appointed representative".
- There were no "exceptional circumstances" in this case. It was not sufficient that the underlying litigation was "substantial" and against well-funded defendants who were competently advised and would involve a considerable burden of paper. The fact that the insured wished to instruct the barrister on a public access basis was also "nothing like enough" to make the case exceptional (any more than if she had wished to instruct solicitors who were not prepared to enter into a standard form of agreement with the insurer).
- The insured was entitled to a declaration but not damages. The insured had sought an extension of the principle established in Farley v Skinner [2002] that general damages could be awarded for breach of contract if "a major or important object of the contract is to give pleasure, relaxation or peace of mind". Seymour HHJ agreed that one of the major objects of the provision of legal expenses insurance was peace of mind, but that was a long way from the facts in Farley v Skinner or other cases (such as holiday cases) where general damages have been awarded. There was no justification to extend the principle to legal expenses insurance especially as "if the principle did extend that far, then, logically, it would extend to all contracts of insurance, for all are intended to provide cover against mishap of some sort and each, to that extent, provides the insured with peace of mind".
Folgate London Market v Chaucer Insurance
Clause in settlement agreement relieving payer in event of payee's insolvency is invalid
http://www.bailii.org/ew/cases/EWCA/Civ/2011/328.html
Millbank was sued following an accident. Its insurers declined cover and Millbank sued the broker who had arranged cover ("F"). That claim was settled and the settlement agreement provided that F would be relieved of its obligation to pay Millbank in the event of Millbank's insolvency (by virtue of clause 11). The third party injured by Millbank joined the insurers to his action against Millbank. Millbank's administrators assigned Millbank's interest in the settlement agreement to the insurers.
Insurers then challenged the validity of clause 11. At first instance the judge held that clause 11 infringed the "anti-deprivation" principle, which "prevents the making of a valid contract by which a man's property is to remain his until bankruptcy but is on such event to pass to someone else and so be taken away from his creditors". The Court of Appeal has now dismissed the appeal against that judgment.
F sought to argue that clause 11 was linked to to Millbank's obligation under the settlement agreement to provide F with all the assistance which it reasonably required to conduct Millbank's defence. Clause 11 was therefore intended to release F from an obligation to pay if Millbank would not be in a position to furnish that assistance. That argument was rejected by the Court of Appeal as "fanciful". Instead, this was "apparently a naked attempt" to provide that F's obligation to pay survived only so long as that payment accrued exclusively for the third party victim but would be extinguished if such payment would instead be available to Millbank's creditors in the event of its insolvency: "This is not a commercial purpose so much as a collateral device to avoid the consequences of the insolvency legislation". A purported "contracting out" of the insolvency legislation was contrary to public policy. Accordingly, the clause was invalid.
JSC BTA Bank v Ablyazov & Ors
Whether court should order a stay pursuant to section 9 of the Arbitration Act 1996
http://www.bailii.org/ew/cases/EWHC/Comm/2011/587.html
The claimant bank alleged that loans which it had made to the third defendant were invalid. It commenced proceedings in the Commercial Court and the third defendants applied for a stay of those proceedings pursuant to section 9 of the Arbitration Act 1996 ("the Act"), on the basis that the loan agreements contained an arbitration clause (providing that any disputes arising from the contract, including ones relating to its performance, breach, termination or invalidity, should be resolved at the International Commercial Arbitration Court at the Russian Federal Chamber of Commerce and Industry). In the case of Birse Construction Ltd v St David Ltd [1999], it was held that the court has a number of choices where a party submits that a contract (and the arbitration agreement contained in it) is not valid and binding. It can:
- determine that the arbitration agreement was made on affidavit evidence; or
- stay the proceedings to allow the arbitrators to decide the issue; or
- order the issue of whether an arbitration agreement has been concluded to be tried whilst staying the proceedings pending a decision on that issue (see CPR r62.8); or
- decided that there was no arbitration agreement and dismiss the application for a stay.
Prior caselaw has held that the court should not normally determine the question on affidavit evidence and the court should pursue option (2) above only in exceptional cases. The claimant argued that a fifth option could be pursued: namely, to decline to make any order and to allow the action to continue, on the the basis that the issue to be resolved is the principal issue in the action. Clarke J rejected that argument. He said it was not open to the court to adopt none of the four options and to leave the question whether the agreement relied on was valid and binding to be determined in an action. "That would be to sidestep the Act".
In this case, the judge held that it could be said that the contract (and the arbitration agreement) were entered into without authority but the contract (and arbitration agreement) had still come into existence and were only voidable (not null and void). He therefore stayed the proceedings in favour of arbitration.
Other News
1) The FSA has published a template for general insurers to notify it of actual or potential liability for UK commercial lines employers' liability insurance:
2) Bribery Act: The government has now published its guidance on how businesses can comply with the Bribery Act (which will come into force on 1 July 2011). It has also produced a short "start guide". Neither document refers specifically to insurers or insurance companies. However, it is worth noting that hospitality is not generally prohibited by the Act and the procedures which businesses will need to put in place only have to be proportionate to the size and nature of the business. The guidance also clarifies that an "associated person" will only engage criminal liability for a company where they actually represent the organisation and any bribery they commit is intended to benefit it. It is anticipated that there will not be a large number of prosecutions, and certainly not for trivial cases. Please see below for the guidance and the quick start guide:
http://www.justice.gov.uk/guidance/docs/bribery-act-2010-guidance.pdf
http://www.justice.gov.uk/guidance/docs/bribery-act-2010-quick-start-guide.pdf
3) Here is the government's response to the consultation on Jackson LJ's proposals for civil litigation costs reform. As well as abolishing the recovery of success fees and ATE premiums, it proposes equalising incentives for claimants and defendants to make Part 36 offers:
http://www.justice.gov.uk/consultations/docs/jackson-report-government-response.pdf
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.
