Tonicstar v Allianz Insurance: Whether lawyer can be an arbitrator where requirement is for "not less than 10 years' experience of insurance or reinsurance"
http://www.bailii.org/ew/cases/EWHC/Comm/2017/2753.html
The reinsurance contract entered into by the parties contained an arbitration agreement which provided that "unless the parties otherwise agree, the arbitration tribunal shall consist of persons with not less than ten years' experience of insurance or reinsurance".
Following a dispute, the respondents appointed Mr Alistair Schaff QC. The claimant accepted that Mr Schaff has considerably more than 10 years' experience of insurance or reinsurance law, but said that that was not the same as "experience of insurance or reinsurance", within the meaning of the arbitration clause. It sought to rely on the unreported decision of Morison J in Company X v Company Y [2000] (a case which the judge in this case accepted was fairly well known in the reinsurance market) in which the judge held that the phrase meant only those working within the insurance and reinsurance industry. The respondents countered that that decision was obviously wrong and that the phrase should include those working with, or on behalf of, that industry.
Teare J saw some force in the respondents' argument (and said that if he had been uninhibited by the earlier decision he might well have accepted the argument) but said that "in circumstances where this court has decided this very question some 17 years ago and where the Joint Excess Loss Committee produced a further draft of the Excess Loss clauses in November 2003 and did not alter the drafting of [the relevant clause]... there must, it seems to me, be a very powerful reason for the court not to follow the decision of Morison J".
However, the judge did not consider that Morison J was obviously wrong. Accordingly, Mr Schaff could not be appointed as an arbitrator in this case.
Furthermore, although the other 2 arbitrators appointed by the parties could rule on their own jurisdiction, they had no power to remove the third arbitrator. The respondent could instead apply the original appointment procedure to the re-appointment of the arbitrator, and so had 30 days from the court's decision to appoint a new arbitrator to fill the vacancy.
COMMENT: The judge in this case referred to the JELC Excess Loss Clauses. Following a 3 year project by the Joint Excess Loss Committee, Joint Excess Loss Clauses (JELC) CL432 have now been published and will replace the previous wording (CL400) with effect from 1st January 2018. JELC CL432 now addresses the issue raised by this case with the following wording "The Arbitrators shall be persons (including those who have retired) with not less than 10 years' experience of insurance or reinsurance within the industry or as lawyers or other professional advisers serving the industry".
RoadPeace v Secretary of State for Transport: Claimant alleges that some aspects of compulsory car insurance contravene EU law
The claimant, a national road safety charity, alleged that various provisions of UK law governing compulsory motor insurance and compensation for the victims of uninsured drivers contravene EU law. Those arguments included the following:
(1) It was claimed that UK statutes which permit insurance policies to include limitations and exclusions on the use insured (eg confining the use of vehicle to "social, domestic or and pleasure use") contravene the EU Sixth Directive. It was also claimed that section 2(4) of the Third Parties (Rights Against Insurers) Act 2010, which allows an insurer to raise, against the innocent third party, rights which the insurer had against the policyholder similarly qualified the absolute protection which the claimants said the Directive required.
Those arguments were rejected by Ouseley J. He said that "It would be remarkable if, without spelling it out in so many words, the CJEU had decided ... that any use which could be made of a motor vehicle required compulsory insurance. The structure of the Directive protects third parties where the use is not covered by the terms of the compulsory cover. It would be a more expensive process to obtain insurance, yet quite unnecessary for the achievement of the Directive's purposes, with attendant needless criminalisation; indeed it could create a perverse incentive to avoid insurance at all".
Accordingly, a policy can lawfully limit or exclude particular uses, which are then recognised as uninsured by the Motor Insurers' Bureau. Similarly, the same defences could be raised by insurers against innocent third parties, provided those defences did not go wider than those which the insurer is entitled to raise against the policyholder: "It would be a strange result if exclusions or grounds for avoiding the contract which could not be raised as against the third party in proceedings against the insured, could nonetheless be raised in direct proceedings against the insurer".
(2) It was, however, accepted that UK law was no longer compatible with the Directive to some degree following the CJEU decision in Vnuk (see Weekly Update 34/14). That decision had held that Article 3(1) of Council Directive 72/166/EEC (which provides that compulsory motor insurance is required to cover civil liability in respect of "the use of vehicles" which are normally based in the territory of a Member State) must be interpreted as meaning that the concept of the "use of vehicles" covers any use of a vehicle that is consistent with the normal function of that vehicle. Accordingly, it is not compatible to restrict compulsory insurance to the use of a motor vehicle "intended for use on roads" and to its use "on a road or public place". The judge therefore concluded that an appropriate declaration to this effect should be granted.
Sino Channel v Dana Shipping: Court of Appeal rules that arbitration notice was effectively served when served on agent of a party
The first instance decision in this case was reported in Weekly Update 19/16. The defendant appointed an arbitrator and emailed a notice of the arbitration to an individual (Mr Cai), who was not an employee of the other party to the purported arbitration (the claimant in this action). However, Mr Cai had been handling the contract in question (and was the main contact point for the claimant) and there was a close relationship between his company and the claimant. After an award was handed down in favour of the defendant, the claimant applied to court pursuant to section 72 of the Arbitration Act 1996 for a declaration that the tribunal had not been properly constituted. Eder J held 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. On the facts, Mr Cai did not have any implied actual authority or ostensible authority to accept service. The Court of Appeal has now allowed the appeal from that decision.
The Court of Appeal held that "As a matter of context and fact, we understand that authority to accept service of originating process requires close scrutiny but are unable to accept that there is no room as a matter of law for implied actual authority in a suitable and, no doubt, rare case". Here, the relationship between the claimant and Mr Cai had been "remarkable" and the claimant had been "apparently content with complete passivity". Since it was Mr Cai's business to deal with all aspects of the contract with the claimant, he had implied actual authority to receive the notice of arbitration.
Furthermore, there was also ostensible authority for Mr Cai to accept service. The appearance given to the defendant was that Mr Cai was to be dealt with for all purposes, including receipt of the notice. Accordingly, there had been a representation by conduct from the claimant that he had such authority.
COMMENT: The Court of Appeal's decision here seems a sensible one, given the highly unusual facts of the case. The judge's conclusion that there had been no valid service of a notice of arbitration had had the unfortunate effect that the party which participated in arbitral proceedings and obtained an award in its favour had wasted time and money pursuing an arbitration which was said to have never been validly commenced.
Campbell v Campbell: Court examines whether risk of dissipation had been proven in an application for a freezing injunction
http://www.bailii.org/ew/cases/EWHC/Ch/2017/2747.html
The claimant sought a freezing injunction over assets located outside England and Wales (shares in a Jersey company). One of the issues in this case was whether there was a risk of dissipation where it was uncontested that the defendant intended to dispose of the shares and send most of the proceeds to Thailand, where he has lived for several years. There was no evidence that use of those sums would "simply form a seamless part of his ordinary course of business or living" (and so there was a risk that the assets would be inappropriately dissipated).
However, the defendant sought to argue that this did not mean that the judgment would not be satisfied. The judge noted that "Where, however, the transfer is not in the ordinary course of business or living, then an intended transfer to an overseas jurisdiction may provide sufficient basis for an injunction once the court considers its effect on whether the judgment will be met. The hurdle does not appear overly onerous".
Here, the fact that the defendant had complied with court orders made by the trial judge and others did not negate the risk of dissipation in the absence of a court order. Nor was the judge persuaded by the defendant's argument that, even if the share proceeds were dissipated, there was no risk that any judgment would go unsatisfied (the judge accepted that these were two different aspects which had to be proven separately but also added that "in most contexts...proof of the necessary risk of dissipation would carry the risk that the judgment would not be met"). There was no evidence here that the defendant would take certain necessary further steps to ensure that the judgment was satisfied voluntarily.
Accordingly, the freezing injunction was ordered.
Optical Express v Associated Newspapers: Court decides not to order the usual costs consequences for accepting a Part 36 offer outside the relevant period
http://www.bailii.org/ew/cases/EWHC/QB/2017/2707.html
Where a Part 36 offer is accepted after the end of the relevant period, the defendant will pay the claimant's costs of the proceedings up to the expiry date of the relevant period and the offeree will pay the offeror's costs from the expiry date of the relevant period to the date of acceptance (unless the court orders otherwise because it considers those costs consequences to be unjust).
In this case, the claimant accepted the defendant's Part 36 offer after the end of the relevant period and the defendant argued that it should be entitled to its costs from an earlier period and should also get its costs from the end of the relevant period on an indemnity basis. Warby J held as follows:
(1) When considering whether the ordinary costs consequences would be unjust, the court should bear in mind that the exercise is different where an offer has been accepted rather than beaten at trial: "not least because in this situation the defendant has decided that it is willing to pay the claimant's pre-offer costs, as the price of settlement. The defendant has gone further and made an explicit commitment to the claimant that it will pay those costs, if the offer is accepted. .. That is one good reason why the hurdle for the defendant is a formidable one here".
It could not be said that the costs consequences should be different just because the offer is accepted after the end of the relevant period. The defendant could have withdrawn its offer or made a Calderbank offer if it wanted a different outcome (and although it may not have known the exact amount of the claimant's costs at the time, "the costs budgeting process, experience, and the fact that it would know its own costs must mean that it had a pretty fair idea").
(2) The defendant could not be said to have been the successful party just because the recovery by the claimant was a fraction of its claim: "It seems to me a recipe for confusion to treat the case as if the outcome was one achieved by going to trial, and to adopt the approach that might be appropriate in that event".
(3) However, the claimant's conduct had been such that the ordinary costs consequences would be unjust in this case. Had it acted reasonably in supplying certain information, the defendant's offer would have been made earlier and so the claimant was entitled to its costs only up to the end of the relevant period for such a hypothetical offer (and some 4 months earlier than the date when the Part 36 offer had in fact been made). The defendant was also entitled to its costs on the indemnity basis from the date when the claimant's solicitors had responded that the offer was "wholly derisory" and rejected (it was accepted about 7 months later).
Bloomsbury Law Solicitor v Macpherson: Deferring the date from which interest at the judgment rate runs
http://www.bailii.org/ew/cases/EWHC/QB/2017/2708.html
The standard position is that the 8% interest rate on judgment debts starts to run from the date a judgment is given. However, the court has a discretion to order a different date from when this interest will run (CPR r40.8). So, for example, it was held in Involnert Management v Aprilgrange (see Weekly Update 37/15) that it is not just to make an order under which interest begins to run before the paying party could reasonably be expected to pay the debt. It was also held in that case that there is no requirement that the case have unusual features in order to justify a later start date.
In this case, it was held that the Master had not erred in ordering a later starting date (of some 3 months) which corresponded to the date on which the paying party had learnt what the other party was claiming in respect of costs.
The payee had referred to the Court of Appeal decision of Bim Kemi v Blackburn Chemicals [2003], in which it was held that interest should run from the date of the original costs order (where an appeal had been handed down later on). That case was distinguished here on the following basis: "Whereas in Bim Kemi the receiving party was a commercial enterprise which had borrowed externally to fund the litigation, the claimant in this case was a solicitor conducting the litigation on his own, and not borrowing or spending money to do so. In those circumstances, the award of interest at a commercial rate is a reasonable exercise of discretion, so far as the period before delivery of the bills is concerned".
BNM v MGN: Assessment of costs for CFA and ATE policy entered into before 1 April 2013
http://www.bailii.org/ew/cases/EWCA/Civ/2017/1767.html
The claimant entered into a conditional fee arrangement and bought an ATE insurance policy prior to 1 April 2013 (and accordingly was entitled to recover the success fee and premium). The short point in this case was whether the success fee and premium were subject to the old or new proportionality rules under the assessment of costs on the standard basis. Under the new test, proportionality has assumed greater importance and so costs that are disproportionate in amount may be disallowed or reduced, even if they were reasonably or necessarily incurred.
The Court of Appeal has now held that the assessment should have been conducted on the footing that the old test applied.
Important proposed changes to Disclosure in the Commercial Court, TCC and Chancery Division: Plans have been announced for a 2 year pilot scheme on disclosure for the Business and Property Courts ie the Commercial Court (including (re)insurance cases), TCC and Chancery Division and the Financial List (as well as the Business and Property Courts in Birmingham, Manchester, Leeds, Bristol, Cardiff, Newcastle and Liverpool).
It is anticipated that changes to the CPR will be sought in spring next year, if the plans go through. In essence, the changes are intended to ensure greater take-up of the "menu" of options for disclosure which was introduced in 2013 (and which, it seems, judges have been reluctant to adopt so far). The key changes are as follows:
(1) "Standard disclosure" will disappear and there will be no one "default" order.
(2) "Basic Disclosure" of the documents on which a party intends to rely (and which are necessary to understand the case) will be given with statements of case.
(3) The Electronic Disclosure Questionnaire will be replaced with a joint Disclosure Review Document ("DRD"). The DRD must be produced after the close of statements of case and before the CMC.
(4) The DRD will include proposals for "Extended Disclosure" (and if so, on what Disclosure Module for which issue).
(5) There will be 5 "Extended Disclosure" Modules. These range from no disclosure on a particular issue to disclosure of documents which may lead to a train of enquiry.
(6) The courts should be proactive and not just accept the Modules proposed by the parties.
(7) Form H Costs Budgets in relation to disclosure will be completed after the disclosure order is made (although costs estimates should be provided in the DRD).
Further details can be found here:
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.
