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

Edwardian Group v Singh: Judge considers whether discussions with litigation funders are privileged

http://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWHC/Ch/2017/2805.html&query=(edwardian)

A disclosing party redacted certain documents on the basis that they were covered by legal advice privilege. The documents related to the party's attempts over a 5 year period to obtain litigation funding. It was accepted that references to the party's legal advice as to the merits and/or strategy of its case were privileged. However, the respondents disputed whether discussions between the party and funders relating to the terms of the funding were privileged as well.

The parties disputed the correct test to be applied. The respondents argued that only communications which reveal the content of legal advice are privileged, whereas the disclosing party argued that a document from which the substance of the legal advice can be inferred is also privileged.

There is conflicting prior caselaw on this point and the respondents sought to rely on FSCS v Abbey National (see Weekly Update 47/07), in which Richards J said that privilege does not attach to a document which does not state the substance of the advice. However, the judge in this case, Morgan J, preferred the decisions in Lyell v Kennedy (No. 3) [1884] and Ventouris v Mountain [1991] (as well as Australian caselaw on the point) in which documents which betrayed the trend of legal advice were held to be privileged: "I would adopt the distinction drawn in AWB v Terence Cole between a case where there is a definite and reasonable foundation in the contents of the document for the suggested inference as to the substance of the legal advice given and merely something which would allow one to wonder or speculate whether legal advice had been obtained and as to the substance of that advice". Accordingly, the discussions with the funders were privileged.

Furthermore, although the judge said that he harboured doubts as to whether the disclosing party's solicitor had applied this test correctly, he could not conclude that it was "reasonably certain" that that was the case. In any event, the court would not, on the ground of proportionality, require him to carry out the exercise again.

A further issue in the case was that the disclosing party had not asked the court to limit standard disclosure (under CPR r31.5). The judge held that "I consider that a court should be cautious before exercising its discretion under CPR r 31.12 in order to withhold proportionate inspection of relevant non-privileged documents on a ground which does not come within rule 31.3 but on account of an assertion that inspection would give the inspecting party a tactical advantage in the litigation".

COMMENT: There are now conflicting High Court judgments on the scope of legal advice privilege and whether (as the judge thought in this case) it extends to include documents from which the substance of legal advice received by a party could be inferred. It is not yet known whether this case will be appealed to the Court of Appeal.

Glencore Agriculture v Conqueror Holdings: Judge holds that arbitration notice was not effectively served on a party's employee

http://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWHC/Comm/2017/2893.html&query=(glencore)

The claimant company sought to set aside an arbitration award on the basis that it had taken no part in the proceedings because it had been unaware of them. The notice of arbitration had been sent to the email address of a relatively low level employee who had left the claimant a month before the purported service of the notice.

Section 76 of the Arbitration Act 1996 provides that the parties are free to agree the manner of service of the notice but, failing that, the notice may be served "by any effective means" (a far wider concept than service of a claim form under the CPR). In Bernuth Lines v High Seas [2006], the arbitration notice was sent to a generic email address which was held out to the world as the only email address of the company. Sending the notice to that email address was held to be valid service in that case.

However, in this case, Popplewell J held that sending an email to an individual employee's email address was different: "Whether it constitutes good service if directed to an individual's email address must depend upon the particular role which the named individual plays or is held out as playing within the organisation". The answer to this question depended on the application of agency principles (even though the individual here was an employee, and not an agent, of the claimant).

Reference was made to the case of Sino Channel v Dana Shipping (see Weekly Update 19/16). Although the first instance decision in that case was overturned last week, there was no disapproval of Eder J's articulation of the principle that "even where an employee or agent has a wide general authority to act on behalf of his employer/principal, such authority does not (without more) generally include an authority to accept service of a notice of arbitration".

The judge found that, on the facts, the employee did not have actual authority, since no express authority had been conferred on the employee to accept service of arbitral proceedings. Nor was there anything to support a finding of implied authority. He had only been a representative of the operational department who had sent operational communications in relation to the performance of the contract, and there was no inference that he was cloaked with authority to accept service of legal process. Nor was there any factual basis to find that the employee had ostensible authority (unlike in the case of Sino Channel).

Accordingly, the notice had not been effectively served.

COMMENT: This case is therefore a warning that care should be taken when serving arbitration notices by email – unlike under the CPR, parties are not obliged under the Arbitration Act to confirm that they are prepared to accept service by email. The judge in this case said that where a generic email address such as info@otherparty.com "has been promulgated by the organisation [as the company email address], whether on its website or otherwise, the sender can reasonably expect the person who opens the email to be authorised internally to deal with its contents if the subject matter falls within the scope of the business activity for the purpose of which the generic email address has been promulgated".

Bates v Post Office: Judge rules that hearing should not be fixed to take account of counsel's availability in group litigation

http://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWHC/QB/2017/2844.html&query=(bates)

When the date for the first CMC in this group litigation case was ordered, the clerks to leading counsel for the claimants advised that they could not attend on that date. Fraser J told the parties that a formal application to move the date would be required but this was not done and the judge refused to change the date for the CMC in this large and complicated case. At the CMC, a substantive hearing was ordered for November 2018. This time, leading counsel for the defendant was unable to make that date because of a prior commitment in the Chancery Division around the same time. Both parties requested the November date be moved into 2019.

That application has now been refused by Fraser J. He said that "Fixing hearings in this group litigation around the diaries of busy counsel, rather than their fixing their diaries around this case, is in my judgment fundamentally the wrong approach" and that "Fitting hearings around their availability has all the disadvantages of doing an intricate jigsaw puzzle, with none of the fun associated with that activity".

Although it might be regrettable that one party might be deprived of their counsel of choice because of listing, that was not an unusual situation. Incremental delay to hearings would lead to the litigation taking longer and costs mounting.

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