Amlin v Oriental Assurance
Application for a stay of proceedings brought by reinsurers/judge's discretion
http://www.bailii.org/ew/cases/EWCA/Civ/2012/1341.html
In 2008, a passenger cargo vessel capsized off the coast of the Philippines after it sailed into the midst of a typhoon. The cargo owners sued the shipowner and brought a direct claim against the shipowner's Philippine cargo liability insurer too. The insurer had entered into a reinsurance contract with English reinsurers and both policies contained a Typhoon Warranty (which warranted that the vessel would not sail where there had been a typhoon warning in the relevant area). The reinsurance contract was subject to the exclusive jurisdiction of England and Wales (and was governed by English law). The English reinsurers commenced proceedings in England seeking a declaration that they were not liable in view of the Typhoon Warranty in the insurance and reinsurance contracts. The reinsured sought a stay of the English proceedings pending the outcome of the Philippine actions. At first instance, Smith J dismissed that application and the reinsured appealed.
The Court of Appeal has now unanimously dismissed that appeal (although Tomlinson LJ and Rimer LJ did so "with little enthusiasm". That was because they felt the reinsured was being forced to adopt a stance in the English proceedings (ie that there had been no breach of the warranty) when that stance might undermine its credibility in the Philippine proceedings (where they were seeking to argue that there had been a breach of the warranty)).
The Court of Appeal held that the judge had used the correct test when exercising his discretion to dismiss the application for a stay. Reinsurance was no exception to the general rule that a stay should be granted only in "rare and compelling" cases. The follow the settlements clause found in the reinsurance policy here did not negate or relevantly impinge on that general rule.
The presence of an exclusive English jurisdiction clause was just one factor which the judge should bear in mind when exercising his discretion regarding a stay. A long delay in the foreign proceedings (here, it was estimated that it might take up to 10 years to reach judgment in the Philippines) could also be a consideration militating against a stay (especially since the projected trial date in England was June 2013). The judge had also correctly taken into account the risk of inconsistent decisions in the English and the Philippine courts.
Tomlinson LJ also noted that "If this were proportional reinsurance it would not be immediately apparent that reinsurers were following the fortunes of their reinsured. As it is, it is excess of loss reinsurance and perhaps the considerations are different. However that may be, we are not ourselves market professionals, we have no evidence of market practice and we should be very wary of pronouncing on what is and what is not appropriate conduct in the market".
EUI Limited v Bristol Alliance
Whether property insurer could bring subrogated claim against motor insurer under the Road Traffic Act 1988 following deliberate act of driver
The first instance decision in this case was reported in Weekly Update 25/11. A driver deliberately drove his car into a department store (in an apparent suicide bid). The property insurers paid a claim under their policy and then sought to bring a subrogated claim against the driver. However, the driver's policy did not cover damage arising out of his deliberate acts. The property insurers were unable to claim under the scheme set up by the Motor Insurers' Bureau because it does not cover the victims of property damage where such damage is insured by the victim's own insurer who then seeks to bring a subrogated claim.
Section 151 of the Road Traffic Act 1988 imposes on motor insurers a duty to satisfy a judgment against their insured provided that certain pre-conditions are met. These include the following pre-condition: that the liability to which the judgment relates "is covered by the terms of the policy.... to which the certificate relates". The motor insurers sought to argue that this condition was not met because the driver's liability was not covered under their policy. The property insurers sought to rely on the words "to which the certificate relates" i.e. the certificate relates to a policy that is certified as satisfying the requirements of the relevant law applicable in Great Britain and therefore must include a liability to compensate third parties for damage caused by the assured even when engaged in a criminal or deliberate act.
At first instance, Tugendhat J held that, although the insured driver could not take the benefit of the policy where his act was deliberate, an innocent third party (or its insurers bringing a subrogated claim) could. The motor insurers appealed and the Court of Appeal has now unanimously allowed that appeal. Ward LJ, giving the leading judgment, held that the liability had to be covered by the policy and "the certificate of insurance does not trump the terms of the policy". The additional words at the end of the pre-condition did not make any difference - their only purpose is to link delivery of a certificate of insurance (another pre-condition in section 151) to the very policy which covers the insured's liability. Nor did European jurisprudence require a different construction to be given to section 151.
It is worth noting, however, that the property owner could himself have claimed under the MIB scheme - it is only because this was a subrogated claim by his property insurers that a claim could not be made under the scheme.
Patterson v MoD
The meaning of "disease" in CPR r45 - of potential interest to employers' liability insurers
http://www.bailii.org/ew/cases/EWHC/QB/2012/2767.html
The claimant soldier sustained an injury known as non-freezing cold injury ("NFCI") whilst undertaking a week of cold weather survival training. His claim against the Ministry of Defence was settled but the issue in this case was the recoverability of the claimant's solicitors' success fee. If NFCI was categorised as "bodily injury" a success fee of 25% would be recoverable in this case under Section IV of CPR r45. However, if it was categorised as a "disease", 62.5% would be recoverable instead under Section V of CPR r45 (both sections applying to employers' liability claims). At first instance, it was held that NFCI was not a disease and the claimant appealed.
That appeal has now been dismissed. Males J noted that there is no definition of "disease" in the CPR and held that relatively little assistance could be derived from dictionary definitions or from prior caselaw where the word has been considered in other contexts.
Instead, he held that the word should be given its natural and ordinary meaning. The claimant had conceded that as a matter of ordinary language, NFCI would not be regarded as a disease. In any event, the judge found the defendant's arguments compelling. NFCI is not caused or contributed to by any virus, bacteria, noxious agent or parasite. It would be stretching the meaning of "disease" too far to apply it to conditions resulting from exposure to weather conditions (eg frostbite or sunstroke). The factors pointing to a different conclusion were insufficient to overcome the defendant's arguments. Accordingly the claimant's solicitors were not entitled to a success fee calculated in accordance with Section V.
COMMENT: Note, though, that from 1 April 2013, the recovery of all success fees (as well as ATE premiums) will be abolished, except for mesothelioma claims (pending further review) and in insolvency proceedings. Any success fee will have to be paid by the CFA-funded party.
Parking Eye v Somerfield
Court of Appeal considers illegality defence
http://www.bailii.org/ew/cases/EWCA/Civ/2012/1338.html
The appellant entered into an agreement with the respondent pursuant to which the respondent monitored and controlled the appellant's car parks. It was agreed that the respondent could send out up to four letters demanding a "fine". The first two demand letters which it customarily sent out did not contain any false representations - however, the third letter did. After the appellant terminated the contract early, the respondent claimed a repudiatory breach and sought damages. At first instance, the judge agreed that there had been a repudiatory breach but also found that the respondent had been guilty of the tort of deceit when it sent out the third letter. Nevertheless, he rejected the appellant's illegality defence (ie that the contract should not be enforceable because of the respondent's unlawful performance of it). The Court of Appeal has now unanimously rejected the appeal from that decision.
It was recognised that the illegality defence is "notoriously knotty territory". The Court of Appeal noted that in some circumstances a contract that does not require the commission of any unlawful act, and which was not entered into to facilitate an unlawful purpose, is nevertheless performed in an unlawful way. However, the effect that this unlawful performance has on the parties' contractual rights is unclear. On the facts of this particular case, the contact involved continuous performance and much of that performance would have been lawful, given that most motorists never received the offending third letter. Furthermore, illegal performance was not an object of the contract and it was not necessary to perform the contract unlawfully. It was held that it would be disproportionate and "unduly sanctimonious" to hold that the respondent could not recover damages because of its actions: "the form of the letters was too far removed from the basic operation of the contract to taint the latter".
Toulson LJ added that he thought that the following factors should be taken into account when considering the applicability of an illegality defence: (1) the object and intent of the claimant; (2) the centrality and gravity of the illegality; and (3) the nature of the illegality.
Phaestos & Anor v Ho
Whether court had jurisdiction to order delivery up to preserve evidence
http://www.bailii.org/ew/cases/EWHC/QB/2012/2756.html
The claimant obtained an order for the imaging of any relevant computer. It subsequently applied for an order for (inter alia) the preservation and delivery up of certain documents. The issue was whether the court could (and should) make such an order.
Although there is no express interim remedy under CPR r25 for the preservation and inspection of evidence (rather than property), the claimant sought to argue that Section 7 of the Civil Procedure Act 1997 allows the court to make an order to preserve evidence. Although that argument was accepted by the judge, he did not believe that the order was necessary or proportionate in the circumstances of this case.
He also accepted the argument that it would be wrong to treat his earlier order as if the images disclosed under that order were disclosable documents under CPR r31 and so it would be wrong the characterise the claimant's application as seeking an inspection of disclosed documents.
OSJC Tnk-BP v Lazurenko
Whether grant of injunction governed by applicable law or law of forum
http://www.bailii.org/ew/cases/EWHC/Ch/2012/2781.html
In this case, the applicable law was Russian law, although the case was being heard in England. One issue which arose was whether an injunction (to restrain disclosure of confidential information) could be granted even though such an injunction would not be available under Russian law. Traditionally, the English courts have regarded the availability of equitable remedies as a matter for the courts hearing a case. However, since the Rome Convention it has been unclear whether the availability of a remedy such as an injunction falls to be determined by the law of the forum or the applicable law. It has been suggested by Chitty that it should be the applicable law and hence if an injunction is not available under Russian law, the English court would have no power to grant one either. Halsbury's has expressed doubt about that conclusion though. The issue was raised in this case, but the Chancellor of the High Court declined to decide it. He instead discharged an injunction against the defendant on another ground (but based on the doubt as to the availability of an injunction).
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