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

Transcription

1 Weekly Update A summary of recent developments in insurance, reinsurance and litigation law 02/10 CONTENTS Spencer v Wincanton 2 A case on the test for personal injury damages where there has been an aggravation of the injuries Aon v JCT Reinsurance Brokers 2-3 An application to discharge a disclosure order Capes v Western Arable 3-4 European Convention on Human Rights and estoppel arguments following the commencement of an arbitration Fenice Investments v Jerram Falkus 4 A case on whether a party should pay following an adjudicator's decision, if it has a point of law to raise Shaw & Anor v MFP Foundations & Piling 4 A decision on setting aside a statutory demand Other News 5 Jackson LJ has now published his final report on civil litigation costs - we set out some key issues in the report 1

2 This Week's Caselaw Spencer v Wincanton Test for personal injury damages where there has been an aggravation of the injuries The claimant was injured at work in 2000 and, because of ongoing pain, he opted to have his knee amputated in Some 8 months later he had a fall which ruptured a tendon in his good leg and so became confined to a wheelchair. Of issue in this case was whether the judge had been correct in holding that, in relation to the second accident, the claimant was contributorily negligent to the extent of one-third. Two issues arose: 1) Was the second accident reasonably foreseeable at all for the claimant's employer? The Court of Appeal found that personal injury caused by the amputation (in the sense that "but for" the amputation, it would not have occurred) was a "kind of consequence" which was reasonably foreseeable in 2000 (the amputation also having been reasonably foreseeable in 2000). 2) Was the second accident in 2003 an "independent, supervening cause" which broke the chain of causation, so that the employer was not liable at all for damage caused by it? Aikens LJ commented that the statement in Clerk & Lindsell on Torts that "for the claimant's subsequent conduct to be regarded as a novus actus interveniens it should be such as can be characterised as reckless or deliberate" was unhelpful and unsupported by caselaw. Sedley LJ was also "uneasy" about importing a formula ("recklessly or deliberately") from the field of criminal law. The Court of Appeal concluded that it was not possible to precisely define what sort of conduct would amount to "unreasonable conduct" by a claimant such as to amount to a supervening cause. It concluded that the judge had been correct to conclude that the employer had remained responsible but that its liability was reduced because the claimant had been contributorily negligent. Aon v JCT Reinsurance Brokers Application to discharge disclosure order The claimant alleges that the defendants carried out a "team poaching" exercise of members of its staff involved in insuring aviation risks. The claimant brought a without notice application claiming various forms of relief, including disclosure by affidavit by five of the defendants, as far as they have knowledge, of, broadly: (a) the recruitment or attempted recruitment of any relevant employee, (b) the solicitation of any client and (c) the disclosure of confidential information. The relief was granted and in this case the claimant sought a continuation of the disclosure order, arguing that it had been found that it had a "good arguable case" about breach of duty and that it needed the order for the following reasons: The claimant does not yet know the full extent of the defendants' wrongdoing. Mackay J found that the claimant was in a position to plead its case without the relief sought. Although the case might be incomplete and partial as presently pleaded, disclosure and further information could be sought in the normal way. 2

3 The claimant needs to take "pragmatic steps" to protect its business. The judge held that there were other steps which the claimant could take to discourage employees from leaving and to bind clients to it. Without the disclosure, the claimant cannot effectively police the relief. The judge found that the claimant would be adequately protected without the need for the disclosure order (especially since there had been no employee departures since August). The claimant argued that damages would be an inadequate remedy. The judge said that "it is not the same thing, in my judgment, to say damages may be difficult to prove as to say that damages are an inadequate remedy", and he noted that there was no suggestion that the claimant would go out of business irretrievably as a result of this episode. The judge found that the order was far wider than anything ordered in any previous cases: "it is the very antithesis of the focused and proportionate approach" needed for such an application. He therefore declined to exercise his discretion to continue the disclosure order. Capes v Western Arable ECHR and estoppel arguments following commencement of arbitration This case involved an application under CPR r11, whereby the defendant challenged the jurisdiction of the court and sought a stay so that the dispute could be referred to arbitration. Havelock-Allan J concluded, on the facts, that no arbitration clause had been incorporated into the agreement between the parties. He then considered two further arguments: 1) The AIC (the Agricultural Industries Federation Ltd) Arbitration Rules are not compliant with Article 6 of the ECHR, which provides that everyone is entitled to a fair hearing "by an independent and impartial tribunal". The AIC requires arbitrators to be on its approved panel. Eight of the panel are members of the AIC and the remaining 3 are members of the NFU (the National Farmers' Union). The claimant argued that the statistical probability was that any first tier tribunal (and certainly any Board of Appeal) would have a majority of arbitrators who were AIC members and therefore the tribunal was not independent or impartial. The judge's "strong provisional opinion" was that this argument was not well-founded. "Independence" meant that the arbitrators should be free from extra-judicial, especially executive, interference in the exercise of their authority: "This applies as much to their tenure of office as to their freedom of decision-making". "Impartiality" is concerned with whether the tribunal adjudicates in a fair and just manner. The fact that a member of a trade tribunal may derive his experience from one sector of the industry does not of itself mean that he lacks independence or is likely to be biased. Even if that was wrong, the judge held that the rights of challenge to an award under section 68 (serious irregularity) and section 69 (appeal on point of law) of the 1996 Arbitration Act represent a sufficient safeguard of the interests of the parties that an arbitration under AIC rules would be most unlikely to violate Article

4 2) The defendant argued that, since the claimant had commenced arbitration, notwithstanding the incorporation of an arbitration clause into the agreement, the claimant was estopped from arguing that it is not now obliged to proceed with the arbitration. That argument was rejected by the judge. He held that the facts did not establish that the claimant had clearly represented that the parties were bound to arbitrate. Nor was there any detriment to the defendant. Fenice Investments v Jerram Falkus Whether party should pay following adjudicator's decision if it has a point of law to raise One of the issues in this case was what is the proper course to be adopted by a party who has been required to pay a sum of money by an adjudicator but who has a bona fide point of construction or of law to raise in connection with that decision. Coulson J concluded that an adjudicator's decision is binding and must be complied with, even if the losing party has brought Part 8 proceedings in the TCC to challenge the decision. A party which fails to comply must expect to be penalised by way of both interest and costs, whatever the outcome of the Part 8 proceedings. As to interest, the court may well impose a punitive rat of interest in accordance with the Late Payment of Commercial Debts (Interest) Act 1988 and the case of Ruttle Plant Hire [2009]. Shaw & Anor v MFP Foundations & Piling Setting aside a statutory demand The appellants appealed against the refusal of a district judge to set aside statutory demands served on them by the respondents on the basis that because they could afford to pay, there was no risk of them being made bankrupt and thus unable to pursue arbitration proceedings to have an adjudicator's decision against them set aside. The district judge had refused to exercise his discretion to set aside the demands despite also finding that the appellants had a genuine and substantial cross-claim which equalled or exceeded the amount claimed in the statutory demands. It was held that the district judge had erred in the exercise of his discretion. Where a statutory demand is founded on an adjudicator's decision, if the debtor can show that he has a substantial cross claim, the insolvency regime does not contemplate that he should be shut out from raising those matters in opposition to bankruptcy proceedings just because he did not raise those matters before the adjudicator. The judge allowed the appeal and set aside the statutory demands. 4

5 Other News Jackson LJ has now published his final report on civil litigation costs. A helpful summary of the recommendations can be found on pages of the report. Some key issues in the report include the following: Positive efforts should be made to encourage the take up of BTE insurance by SMEs. However, success fees and ATE insurance premiums will no longer be recoverable (although the level of general damages for personal injury should be increased by 10%). Contingency fee arrangements (but not conditional fee arrangements) will still be allowed, provided that the client has received independent legal advice; Third party funding is allowed (subject to the rules of maintenance and champerty) and a satisfactory voluntary code should be drafted (with possible FSA regulation if the market expands); ADR (including mediation) will not become compulsory but it should be promoted more; Further information If you would like further information on any issue raised in this update please contact: Nigel Brook nigel.brook@clydeco.com Clyde & Co 51 Eastcheap London EC3M 1JP Parts III and IV of the recent Practice Direction on Pre-Action Conduct (introduced in April 2009) should be repealed; For Part 36 offers, Carver v BAA (whereby the court takes into account all the circumstances of a case (and does not just make a financial comparison) in order to decide whether an offer is "at least as advantageous as" or "more advantageous than" the amount awarded) should be reversed. If a defendant rejects a claimant's offer, but fails to do better at trial, the claimant's recovery should be enhanced by 10%; The payment of referral fees for personal injury claims should be banned and qualified one-way costs shifting should be introduced for personal injury claims; Tel: +44 (0) Fax: +44 (0) Further advice should be taken before relying on the contents of this summary. Clyde & Co LLP accepts no responsibility for loss occasioned to any person acting or refraining from acting as a result of material contained in this summary. No part of this summary may be used, reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, reading or otherwise without the prior permission of Clyde & Co LLP. The recoverable costs of cases in the fast track (dealing with claims worth more than 5,000 but less than 25,000) should be fixed; A new CPR r31.5a should be drafted for large commercial claims, whereby a "menu option" for disclosure should be adopted; Recommendation that (where the parties consent) the concept of experts giving concurrent evidence ("hot tubbing") should be piloted; It is also recommended that CPR r35 be amended so that a party seeking permission to adduce expert evidence must provide an estimate of the costs of that evidence to the court. Please click here to see the full report Clyde & Co LLP is a limited liability partnership registered in England and Wales. Regulated by the Solicitors Regulation Authority. Clyde & Co LLP 2010 Clyde & Co LLP offices and associated* offices: Abu Dhabi Bangalore* Belgrade* Caracas Doha Dubai Guildford Hong Kong London Moscow Mumbai* Nantes New York Paris Piraeus Rio de Janeiro Riyadh* San Francisco Shanghai Singapore St Petersburg* 5