Alan Phillips Associates Ltd v Terence Edward Dowling T/A The Joseph Dowling Partnership and Others
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE CHADWICK,Lord Justice Chadwick,LORD JUSTICE MOSES |
| Judgment Date | 12 January 2007 |
| Neutral Citation | [2007] EWCA Civ 64 |
| Docket Number | B2/2006/1050 |
| Date | 2007 |
| Year | 2007 |
| Court | Court of Appeal (Civil Division) |
[2007] EWCA Civ 64
Lord Justice Chadwick
Lord Justice Moses
B2/2006/1050
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CHICHESTER COUNTY COURT
(HIS HONOUR JUDGE BARRATT)
Royal Courts of Justice
Strand
London, WC2
MR R BOOTH (instructed by Messrs Coole & Haddock) appeared on behalf of the Appellant.
MR C DARTON (instructed by Messrs Bennett Griffin) appeared on behalf of the Respondent.
This is an appeal from an order made on 2 June 2006 by HHJ Barratt QC sitting at Chichester County Court on an application by Mr Terence Dowling and others, trading as the Joseph Dowling Partnership, for a third party costs order against Mr Alan Phillips, a director and substantial shareholder in Alan Phillips Associates Limited. The application followed the successful defence by the Joseph Dowling Partnership of proceedings brought against them by the Phillips company. The judge made the third party costs order sought. Mr Phillips appeals to this court with permission granted by Sir Christopher Staughton on 27 June 2006.
Mr Phillips is an architect. Until September 1999, if not thereafter, he carried on practice under the firm name Alan Phillips Associates. At that time, and until 2001, the defendants ran a nursing home (or residential care home) at premises known as 39 – 41 Willbury Villas, Hove. In August 1999, they appointed Mr Phillips as architect to a development project involving an extension and internal alterations at that property. Mr Phillips' letter accepting that appointment, which is dated 10 August 1999 and which is on the headed stationery of the firm, explained that the firm's professional services were regulated by the Royal Institution of British Architects and the Architects' Registration Board. The significance of that statement was that the architects' code, Standards of Conduct of Practice, issued by the Registration Board required that architects should not undertake professional work without adequate and appropriate professional indemnity insurance cover.
The company, Alan Phillips Associates Limited, was incorporated on 15 September 1999. The directors were Mr Alan Phillips and his wife Mrs Christine Phillips. Mr Alan Phillips was the secretary. He held 70 of the 100 issued shares. The remaining 30 shares were held by Mrs Phillips. It appears from September 1999 or thereabouts the architectural practice was carried on by the company; although, as the judge found, Mr Phillips continued to use the firm name Alan Phillips Associates, “in whatever capacity he has purported to act as an architect from time to time”. The stationery used by the company was almost indistinguishable from that used by the firm, save for the word “limited”, which appears under the words “Alan Phillips Associates” in small print. The VAT registration number, 699400303, as it appears on the stationery of both the firm and the company, is the same number.
On 27 April 2007 Mr Alan Phillips wrote to Mr Terence Dowling, on the stationery of the company, to accept appointment as architect and designer of a further project at the premises 39 - 41 Willbury Villas. The circumstances in which that appointment was made are explained by Mr Dowling in a witness statement dated 28 February 2006. He said this, at paragraphs 3 and 4:
“3. The other defendants and I formerly ran a nursing home from commercial premises at 39 — 41 Willbury Villas, Hove ('the property'). Prior to 2001, we decided to close the nursing home business and convert the property into residential flats (the 'development'). We consulted Mr Phillips about this proposal as he had previously acted for us in 1999 in relation to a rear extension to the property.
4. On obtaining planning permission for the conversion Mr Phillips wrote to us on the claimant's headed notepaper on the 27th April 2001 setting out the terms on which his Company would act as our architect, surveyor and project manager. We accepted these terms, but did not really give much thought to the identity of the party that we had appointed. So far as the other defendants and I were concerned Mr Phillips would be taking charge of the project as our architect.”
The letter of 27 April 2001 contains a paragraph in these terms:
“We confirm that we maintain professional indemnity insurance cover of £250,000 for any one occurrence or series of occurrences arising out of one event and this will be the maximum of our liability arising out of this agreement.”
Mr Dowling countersigned that letter under the endorsement:
“The client wishes to appoint Alan Phillips Associates Limited as the architect and designer for the project and the architect has agreed to accept such appointment and to perform the services upon and subject to the terms set out in this letter of appointment.”
The insurance position as at that date or shortly thereafter—as now appears from the policy schedules and a verification dated 3 August 2001 issued by RIBA Insurance Agency Limited—was that professional indemnity insurance to a limit of £250,000 was in force in the name of the firm but not in the name of the company. That remained the position until 23 April 2002. From 24 April 2002 to 23 April 2003 the assured named in the policy schedule was Alan Phillips Associates Limited. Thereafter for the years 2003/2004, 2004/2005 and 2005/2006 both the company and the firm were named as the assured.
In or about September 2002 the defendants, the Dowling Partnership, excluded the architect from the site at 39 – 41 Willbury Villas. These proceedings were commenced on 16 April 2003 by the issue of a claim form in the Worthing County Court. The claimant named in the claim form was Alan Phillips Associates: that is to say, the claimant was Mr Phillips personally suing under the firm name. The claim was for architect's fees said to be due to the claimant under a letter of instruction dated 5 October 2001. In fact the letter was dated 9 October 2001. It was signed by Mrs Christine Phillips, pp Alan Phillips, but was on the company's stationery. It referred simply to an invoice; and to an agreement to the balance of the fees being paid at the end of the project. The balance of the fees said to be due under that letter was £48,000 or thereabouts.
On 23 July 2003, shortly after the defendants had instructed solicitors, those solicitors wrote to the claimant's solicitors in these terms:
“We write to advise you that we are taking counsel's opinion in this matter and would put you on notice that we may be making a claim of negligence against your client. In this regard we should be obliged if you would provide us with your client's insurance details and request that you put the insurance company on notice of the intended proceedings.”
That letter was followed by a letter of 28 August 2003. That referred to the earlier letter of 28 July, noted that there had been no response to that letter, sought confirmation that the claimant's solicitors had notified insurers of a potential professional negligence claim, and requested that insurance details be provided. The response to that was a short sentence in a letter of 1 September 2003 from the claimant's solicitors: “The question of insurance is entirely a matter for our client and his advisors”. The defendant's solicitors made another attempt to obtain the information. On 4 September 2003 they wrote in these terms:
“We are considering bringing the insurers into this matter as a third party and consequently require their details. Your client's correspondence to us clearly sets out an insurance indemnity of up to £250,000 and is a term of the contract. We have put you on notice that a potential negligence claim exists and we require the insurers' details to ensure that any potential order for damages received in favour of our client will be met. If you do not assist in this simple request we shall have no choice but to make an application for disclosure of this information and seek the costs incurred against yourselves.”
That too received a brusque answer from the claimant's solicitors. They wrote on 10 September 2003:
“The question of our client's insurers is with the greatest respect one for our clients. At the moment you have raised what the district judge considered to be unspecified and vague allegations of negligence. Absent these we consider your request is mischievous and simply designed to cause our client problems with his insurers. You state that you will be making an application to the court. There is no legal basis whatsoever upon which such an application can be made.”
The insurance position as at September 2003 when those letters were written, as I have already explained, was that during the period up to 23 April 2002 the assured had been the firm—that is Mr Phillips personally—and during the year to 23 April 2003 the assured had been the company. In September 2003 both Mr Phillips and the company were named as assured.
Mr Phillips did not notify the insurers. The reasons for what was, plainly, a deliberate decision not to do so appear at paragraph 7 of his witness statement dated 22 April 2006:
“I was first asked by the defendant's solicitors as to the company's insurance position by letter of 28 July 2003. At this stage I had had an excellent claims record and was aware that premiums were highly sensitive to claims' history. In my view I saw this as another tactic by the defendant to muddy the waters and I made a commercial decision – wrongly with hindsight – not to report the matter to the insurers...
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