Legal Watch: Property Risks & Coverage May 2015 Issue 005
Introduction This month we look at the cases of Senior v Rock UK Adventure Centres Ltd & Anor and KL Communications Ltd v Wenfui Fu,
neither of which are property damage claims but both of which justify some consideration here.
Thanks go to Rob Carr for his article looking at when a
defendant should disclose insurance details to a claimant, in
• Victoria Jordan and Graham Brown of Parabis – “The
Insurance Act 2015: Get on the bus! You wait 100 years for one insurance law reform and then they all come along at once”
To book your place (and places for any of your colleagues) email marketing@parabis.co.uk
light of the case of Senior v Rock UK Adventure Centres Ltd & Anor.
Lord Dyson, Master of the Rolls and Head of Civil Justice, features quite heavily this month, both in relation to guideline
In this issue:
tasks within civil litigation from judges.
• Welcome new colleague
We also look at the amendments to the Pre-Action Conduct Practice Direction which came into force on 6 April 2015.
• When should the defendant disclose details of insurance to a claimant?
Finally, we welcome a new member to the team, Robert Kay.
• Extended civil restraint orders
hourly rates and a controversial pilot scheme to remove certain
Robert’s profile is below.
National Annual Property Risks and Coverage Conference There are still some places left for our second National Annual Property Risks and Coverage Conference to be held from
2.00pm to 5.00pm on Thursday 21 May 2015 at the London
• Guideline hourly rates - update • County court legal adviser pilot scheme • Amendments to Pre-Action Conduct Practice Direction
Stock Exchange.
There will be presentations from leaders in their fields with our
own specialist lawyers available throughout the afternoon to
Contact us
answer your questions and discuss current issues. Drinks and
If you would like any further information on the cases or articles featured in this issue, please contact:
for you to share views with us and your industry colleagues.
Marise Gellert
Confirmed speakers:
T: 0207 469 6249
canapés after the conference will provide an excellent chance
• Mamoon Alyah of LWG Consulting UK Limited – “New
Dimensions to Forensic Engineering and Property Risks”
• Flemming Jensen of Matson Driscoll & Damico UK LLP – “A Forensic Accountant’s BI Perspective on Fraud, Cyber and Early Settlement”
E: marise.gellert@greenwoods-solicitors.com Robert Carr T: 0207 469 6269 E: robert.carr@greenwoods-solicitors.com
Welcome new colleague Robert Kay Robert was called to the Bar in 1999 and cross-qualified as a solicitor in 2009. Having been a partner with a USA
firm acting for a number of leading UK, US and European insurers, as well as Lloyd’s syndicates, Robert joins us with
a very strong background in general commercial insurance work, particularly with a foreign/international element.
He also has an interesting practice in film and entertainment work handling disputes relating to film, TV and advertising issues.
He is very active as a deliverer of legal training in the UK and abroad.
Robert will help strengthen the quality and diverse capabilities of the team’s Property Risks and Coverage offering, with his expertise in handling large-scale losses and
complex litigation adding to the team’s existing experience.
01
When should the defendant disclose details of insurance to a claimant? In this article Rob Carr discusses the approach of the
The courts have generally refused to order disclosure of
party and the recent case of Joshua Senior v Rock UK
must take a defendant as he finds him and, must face the
21/04/2015. The full judgment is awaited and, at first blush,
whether a target has the ability to pay.
courts to the disclosure of insurance details to another
the private insurance arrangements of a party. A claimant
Adventure Centres Ltd & Anor (2015) QBD (Judge Robinson)
same risk as anyone else when coming to a decision as to
the case may seem to provide an authority to claimants to support disclosure. However, on closer examination, it is
submitted that the case is unlikely to support a general duty to disclose insurance details.
The facts
In West London Pipeline and Storage Ltd v Total UK Ltd
[2008] EWHC 1296 (Comm), the request for the provision of information about insurance arrangements was refused and the court accepted that the defendant would be
prejudiced by such disclosure. The defendant submitted that “while it could be argued with some force that it would
The claimant, Joshua Senior, fell nine metres (29ft) at Rock
be advantageous for a litigant to know what his opponent
Kent. He suffered a broken back, was paralysed from the
advantage would be outweighed or at least matched by the
the accident in August 2010.
knowing the “depth of the pocket” whether for negotiation
UK adventure centre at Carroty Wood, near Tonbridge,
was worth, such did not justify disclosure. Indeed, any such
waist down for six months and lost his right foot following
prejudice to the insured and his insurers in their opponents
The defendant employer had conceded liability and the
claimant applied for an order requiring the defendant to disclose details of its employers’ liability insurance cover.
The claimant’s schedule of loss specified that he sought
damages in the form of a lump sum, as well as an order for periodical payments. The claimant argued that disclosure of insurance details was required in order for the trial judge to
decide if it was appropriate to make any periodical payment order, as he had to be satisfied that continuity of payment under such an order was reasonably secure.
Background
purposes or otherwise”.
There have been notable exceptions. The Court of Appeal in Re OT Computers [2004] EWCA Civ 653, ordered a defendant to give pre-issue disclosure
of insurance details in a case governed by a section 2(1) of the Third Parties (Rights Against Insurers) Act 1930. This
was a case where the defendant was in liquidation, so the defendant’s insurer was being pursued direct under the act
In XYZ v Various [2014] EWHC 4056 (QB), one of the cases
surrounding the breast implant litigation, the claimant made an interim application seeking disclosure of insurance details. There was a concern that some of the defendants
The provision of a defendant’s insurance arrangements
would have no insurance and insufficient funds to satisfy any
comfort from knowing that at the end of the case there
insurance arrangements were not part of the actual dispute
element of pragmatism to any case handling.
order that the defendant provided a witness statement
is often sought by claimants. A claimant will take some
orders for costs/damages. It was held that the defendants’
will be someone with deep pockets who may also bring an
and did not have to be disclosed. The court did however stating whether the company had adequate insurance to fund the litigation.
02
In Harcourt v FEF Griffin [2007] P.I.Q.R. Q9 the claimant had
asked to consider an order for periodical payments in a
with damages to be assessed. The full value of the claim
to consider the defendants’ ability to comply with regular
defendants were an unincorporated association and only a
court time.
It seems the courts have little appetite for any general requirement to disclose insurance details.
Whilst in Harcourt the court did order disclosure under
In Harcourt, the injuries claim was a significant one and there
arrangements should only be ordered where a party could
ability to satisfy any final money judgment.
sustained catastrophic injuries and had obtained judgment
personal injury matter and such an order requires the court
was said to be between £8 million and £10 million. The
payments over an often lengthy period.
limited number of individuals, none of whom were wealthy. The claimant therefore applied for an order to ascertain
how judgment including costs might be met. The claimant argued that if the defendant did not hold insurance sufficient
to satisfy an award then it would be wrong to proceed to
a contested quantum phase, generating costs and wasting
Part 18 of the CPR, it was said that disclosure of insurance
was evidence to suggest the defendant might not have the
demonstrate that there was some real basis for concern
OT Computers concerned a duty to disclose, pursuant to a
that an award in the case might not be satisfied. The court felt that ordering disclosure of such information should be approached with caution. Although the nature and extent
of the defendants’ insurance cover was not a “matter...in dispute in the proceedings”, the purpose of Part 18 was
to ensure that the parties had all the information to enable them to deal ‘efficiently and justly’ with the matters in dispute. The court rules were to be interpreted reasonably
liberally and were broad enough to cover information of the kind sought.
Judgment The court held that insurance details were to be disclosed in
claim underpinned by statute.
Whilst it is clear that the trend is towards a more open approach to litigation, the potential for prejudice to the
defendant and his insurers must be borne in mind. In the climate of “cards on the table” the question is: are details
of insurance a factor which a claimant should be able to take into account when considering the merit of pursuing a claim? The answer to this seems to be: no.
Also, when considering the appropriate share of court
resources to be allocated to a case, should the court take into consideration the prospects of an effective recovery?
At present the Harcourt authority seems to be limited
this instance. The full judgment is awaited.
to personal injury matters. Whilst insurers may now see
Comment
details, it is clear that the courts seem to take a different
It seems the courts have little appetite for any general
damage claim supported by the citation of Senior should be
requirement to disclose insurance details. The authorities discussed above have specific factors that have influenced the court when ordering disclosure, most of which appear to be personal injury related.
Senior falls into the same category, having a discrete reason that led the court to order disclosure. The court was being 03
Senior cited to support requests for disclosure of insurance view in personal injury matters and any request in a property
resisted, on the basis that Senior can be distinguished as it is fact specific i.e. it relates to whether there was sufficient funding for periodical payments in a personal injury case.
The full judgment is awaited however, in terms of non-
personal injury liability policies, the authority currently remains as set out in West London Pipeline.
Extended civil restraint orders The case of KL Communications Ltd v Wenfei Fu (2015) IPEC (Warren J) involved an employment dispute where the
claimant employer applied for an extended civil restraint
order (CRO) in respect of the defendant former employee. The defendant sought to argue that the extended CRO should not be made on the basis that she did not understand
The orders made did not certify that the applications had
been dismissed as having been totally without merit, although the relevant judgments were clearly on that basis, for example, by stating that the disclosure application served no purpose when judgment had already been entered.
the legal process and had just got things wrong.
The claimant submitted that the defendant’s applications
Facts
failure by her to engage properly with the litigation process,
The claimant employer issued a claim alleging that the
make totally without merit applications. The defendant
defendant employee had dealt with its database improperly. The defendant requested that all correspondence be sent
to a different address. The claimant duly served the claim
form on both addresses but the defendant failed to file a
defence and the claimant obtained judgment in default. The
had been bound to fail, which demonstrated a complete so that there was a real threat that she might continue to
submitted that she was a litigant in person trying to ensure
that the merits of her defence were adjudicated and that she had made mistakes because she did not understand the legal process.
defendant did not apply to set aside the default judgment nor did she appeal it. Instead she obtained a stay of execution
Background
of a costs order made against her and at the hearing of the
The court has the power to grant a CRO (limited, extended or
claimant’s application to set aside that stay, she argued that
general) pursuant to its general case management powers
the merits of her defence had never been heard. The judge
under CPR r3.11 and Practice Direction 3C.
directed that the defendant serve:
Where the court makes an extended CRO, the party against
• supporting evidence • a witness statement explaining the order she sought
whom the order is made will be restrained from issuing claims or making applications in –
and why the court should exercise its discretion to set
• any court if the order has been made by a judge of the
successfully defending the claim
• the High Court or the county court if the order has been
aside the judgment, and why she had a real prospect of • a draft defence The defendant did not comply by the deadline set by the court and instead made 11 separate applications for orders, including orders that:
• that the claimant disclose evidence • the claimant’s claim be found to have been libellous and groundless; and
• the claimant be held to have maliciously prosecuted her
Court of Appeal
made by a judge of the High Court; or
• the county court identified in the order if the order
has been made by a designated civil judge or their
appointed deputy, concerning any matter involving or relating to or touching upon or leading to the
proceedings in which the order is made without first obtaining the permission of a judge identified in the order
04
•
c
Judgment In order to grant an extended CRO the court has to be
satisfied that the defendant has persistently issued claims or made applications that were totally without merit (Practice
Direction 3C paragraph 3.1). Following the case of Ludlam (A Bankrupt), Re [2009] EWHC 2067 (Ch), [2010] B.P.I.R. 98, for there to be a ‘persistent’ course of conduct, there had to
be more than two such claims or applications, otherwise a limited CRO was the appropriate order.
Here the court held that it had the power to determine
whether that was the case without having to send the 11
applications back to the respective judges who had dealt
with (and dismissed) them and it held that there had been the required persistent course of conduct.
The fact that the defendant was a litigant in person who did not understand the process or had got things wrong was
entirely supportive of the making such an order, rather than being something that the defendant could rely on to resist the making of the order.
The court did not require a long history of non-compliance
and further indulgence from the court and could make the order now. The defendant’s response had always been
simply to complain that the merits of her case had not been dealt with and she did not address why she had failed properly to deal with her applications.
The CRO can be a very valuable tool in such situations, as it seeks to ‘regulate’ the behaviour of the litigant who might
otherwise seek to make numerous applications without merit, in the hope that they will ‘beat the other party into submission’.
The fact that the defendant was a litigant in person who did not understand the process or had got things wrong was entirely supportive of the making such an order, rather than being something that the defendant could rely on to resist the making of the order.
The court held that making an extended CRO would not
Applications for permission under the CRO are dealt with on
applications properly or not at all. An extended CRO with a
with numerous unmeritorious applications, on the basis that
the she intended to bring further proceedings.
first hurdle and be listed for a hearing.
prejudice her rights in any way; it would force her to make
paper, which also helps to limit the costs of having to deal
two-year limit was appropriate, as there was evidence that
only those that appear to have merit will make it over the
Comment We have been told to expect that in the current legal climate, with such changes as substantially increased court fees, we will see more litigants in person. Inevitably, that will mean more vexatious litigants, without representatives to curb their behaviour.
05
Guideline hourly rates - update In the July 2014 issue of Legal Watch (Issue 7) we reported that the Civil Justice Council Costs Committee had
submitted its report on the guideline hourly rates to Lord Dyson, Master of the Rolls.
Having considered the report and having had discussions
with the Law Society and the Ministry of Justice, Lord Dyson has now announced an indefinite freeze in the
current guideline hourly rates for litigation costs (which have been frozen since 2010) on the basis that there are neither
the resources nor the mechanism for determining what the hourly rates should be.
In July 2014 Lord Dyson declined to accept the proposals
of a Civil Justice Council Committee established to review the rates (which would have resulted in an average 5%
decrease in the rates) on the basis that he considered the committee’s evidential base to be insufficiently safe. He has
now expressed “considerable doubt” that even if funds were
“I have long advocated their wider application, and will continue to press this point to ministers and others in the hope that this important element of the Jackson reforms is implemented.” We will report any further developments in this regard if and when they occur.
forthcoming to undertake the necessary research, there would be sufficient numbers of firms willing to participate to produce an “adequate evidence base”.
Whilst the guideline hourly rates will remain in force for the
foreseeable future as the default figures for costs figures,
and remain, in the words of Lord Dyson “...a yardstick
for comparison purposes in costs budgeting” they are considered to be of less relevance and we may well see the
return of lengthy arguments on detailed assessment, even in relatively straightforward cases, to justify a departure from the guideline hourly rates and to include inflation based increases.
It is also clear that Lord Dyson has not dismissed widening
the application of fixed costs. On that point Lord Dyson said: “I have long advocated their wider application, and will continue to press this point to ministers and others in the
hope that this important element of the Jackson reforms is implemented.”
06
County court legal adviser pilot scheme The Civil Procedure Rules were updated earlier this year
to allow for judges to be removed from certain tasks, such
as amending particulars of claim, after a vote by the Civil Procedure Rule Committee.
Practice Direction 51K, which comes into effect on 1 October
2015, provides for a 12 month pilot scheme for claims started at the County Court Business Centre (“CCBC”) and the County Court Money Claims Centre (“CCMCC”), which
include Northampton Bulk Centre, Money Claim Online and the County Court Money Claims Centre in Salford. Under the pilot scheme “legal advisers” will take over certain duties from judges in civil claims.
“Legal adviser” is defined as a court officer assigned to the county court who is: • a barrister; or • a solicitor, who may exercise the jurisdiction of the county court with regard to the matters set out in
paragraph 2.1 and in the schedule to the Practice Direction, with the consent of the designated civil
judges for Northampton and Leicester Trial Centre, in respect of the CCBC, and Manchester Civil Justice
Centre & Manchester Outer, in respect of the CCMCC, or their nominee
The schedule lists the work type (and applicable restrictions) that may be exercised by a legal adviser, which includes (but is not limited to):
• rectifying procedural errors (limited to those instances where the court serves the claim contrary to the claimant’s instructions)
• applications to extend time for service of claims (subject to restrictions and limited to applications made during the period for service of the claim form)
• applications to amend particulars of claim or the amount of the claim (limited to applications received before a defence is filed or, if after, claims which have been or
would normally be allocated to the small claims track) 07
• applications to add or substitute a party to proceedings
(limited to applications where all existing parties and the proposed new party agree)
• applications to set aside default judgment (limited to
applications where all parties consent and the judgment is not satisfied)
• applications to stay proceedings, extend a stay or
remove a stay (subject to all parties consenting and in the case of an application for a stay or extension to a stay, limited to one application)
Decisions of a legal adviser will be made without a hearing
and paragraph 3 of the Practice Direction allows parties to request that any decision of a legal adviser be reconsidered
by a district judge within 14 days of being served with notice of the decision. The request must include a summary of
the issue and an explanation of why the reconsideration is sought. The reconsideration will also take place without a hearing.
The scheme is considered to be quite controversial and Lord Dyson was recently questioned about it, as concerns
have been raised that it has been ‘rushed through’ without
a consultation. He stressed that the scheme will go ahead only once staff are properly trained and they will work closely with at least one deputy district judge.
HM Courts and Tribunals Service have confirmed that safeguards will be in place and there will be strict limits on what legal advisers will be expected to do.
There is no suggestion that the fee will be any less for an
application to be dealt with on paper by a legal adviser
and it remains to be seen whether, instead of speeding up and making the process more streamlined, parties (and particularly litigants in person) will exploit the process by seeking reconsideration of every decision that is not made in their favour, effectively just adding another step and further delay.
Amendments to Pre-Action Conduct Practice Direction The Pre-Action Conduct Practice Direction (“PACPD”)
which applies to cases where there is no specific Pre-Action Protocol (“PAP”) has been amended and came into effect
a) understand each other’s position; [this is new] b) make decisions about how to proceed; [this is new]
on 6 April 2015.
c) try to settle the issues without proceedings
The new PACPD replaces the previous version in its entirety
d) consider a form of alternative dispute resolution (ADR)
court would normally expect the parties should take before
e)
and is shorter and more succinct. It still sets out the steps the
commencing proceedings but it is far less prescriptive than
the previous version. Not only does it apply to cases where there is no specific PAP but certain requirements now apply to all cases.
The new version of the PACPD can be found at: http://www. justice.gov.uk/courts/procedure-rules/civil/rules/pd_preaction_conduct
It still sets out the steps the court would normally expect the parties should take before commencing proceedings but it is far less prescriptive than the previous version The main changes are as follows: • the previous lengthy introduction section has been omitted
• although the overall objective of the PACPD has not changed, paragraph 3 makes it clear that the court
will expect the parties to have exchanged sufficient information to-
to assist with settlement support
the
proceedings; and
efficient
management
of
those
f) reduce the costs of resolving the dispute • there is an entirely new section (paragraphs 4-5) dealing with the issue of proportionality. Paragraph 4 makes it clear that parties should not use a PAP or the PACPD “as a tactical device to secure an advantage over
another party”. It goes on to state that only “reasonable and proportionate steps should be taken by parties to
identify, narrow and resolve the legal, factual or expert
issues”. Disproportionate costs in complying with a PAP or the PACPD will not be recoverable (paragraph 5)
• the section on steps before issuing proceedings is now less prescriptive and sets out what the steps to be taken will usually include
• paragraph 7 deals with experts and this is far less
prescriptive than before, simply stating that parties
should be aware that the court must give permission
before expert evidence can be relied upon and that the court may limit the fees recoverable. It points out that
many disputes can be resolved without expert evidence and that the parties should consider using a single
jointly instructed expert, with fees shared, particularly in low value claims
• the section on settlement and ADR places even more emphasis on ADR and reminds parties that Part 36
offers may be made before proceedings are issued. It
also lists ombudsmen schemes as a way that disputes 08
may be resolved. Paragraph 11 makes it clear that a
party’s silence in response to an invitation to participate or refusal to participate in ADR might be considered
unreasonable conduct by the court and could lead to costs penalties
• the section on compliance is shorter than the previous version but the essence of the section remains the same, providing examples of non-compliance and possible orders following non-compliance
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Contact us For information on articles and cases featured in
other editions of Property Risks and Coverage Newsletters, please contact: Marise Gellert Partner T: 020 7469 6249 E: marise.gellert@greenwoods-solicitors.com
www.greenwoods-solicitors.com
www.plexuslaw.co.uk
The information and opinions contained in this document are not intended to be a comprehensive study, nor to provide legal advice, and should not be relied on or treated as a substitute for specific advice concerning individual situations. This document speaks as of its date and does not reflect any changes in law or practice after that date. Plexus Law and Greenwoods Solicitors are trading names of Parabis Law LLP, a Limited Liability Partnership incorporated in England & Wales. Reg No: OC315763. Registered office: 12 Dingwall Road, Croydon, Surrey CR0 2NA. Parabis Law LLP is authorised and regulated by the SRA.