Arts & Antiques Ltd v Peter Richards and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Hamblen |
| Judgment Date | 05 November 2013 |
| Neutral Citation | [2013] EWHC 3361 (Comm) |
| Docket Number | Case No: 2012-1440 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 05 November 2013 |
[2013] EWHC 3361 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice,
Rolls Building, Fetter Lane, London, EC4A 1NL
Mr Justice Hamblen
Case No: 2012-1440
Lesley Anderson QC and Jas Chhotu (instructed by Hennebery & Co) for the Claimant
David Lord QC (instructed by Mills & Reeve) for the 1 st and 2 nd Defendants
Anneliese Day QC (instructed by Kennedys) for the 3 rd Defendant
Hearing dates: 28 October 2013
Introduction
In these proceedings the Claimant jeweller ("A&A") makes various claims against its insurers, the third Defendant ("Zurich"), in connection with the insurance of, amongst other things, stock and other items, including jewellery and watches at A&A's premises, against all risks, including theft, for the period 3 October 2006 to 2 October 2007. It also makes related claims against the insurance brokers involved in the placement of the insurance, the second Defendant ("Towergate"), and the individual Towergate broker involved, the first Defendant, Mr Richards.
The Defendants apply to strike out the claims made, alternatively summary judgment. If and to the extent that their applications are not successful, Towergate and Mr Richards seek security for their costs.
Factual/procedural background
A&A is a jeweller which at all material times carried on its business from 8 Blenheim Street, London ("the Premises").
On 31 May 2007 a robbery took place at the Premises. A&A sought to make a claim under its insurance contract with Zurich for losses claimed to have been suffered in the robbery. Zurich denied that it was entitled to do so by reason of breaches of certain conditions precedent and/or warranties contained in the insurance policy.
A&A commenced the arbitration by invoking clause 21 of the policy wording which required all disputes to be referred to arbitration under the ARIAS rules. In the Notice of Arbitration A&A asserted that the policy was dated 25 October 2006 with the policy number 831EJ015207b10. The Notice attached the policy wording and defined the dispute referred as follows: "…whether the Claimant is entitled to an indemnity under the Policy, and if so how much".
The First Partial Award of the sole Arbitrator, Colin Edelman QC, set out the Arbitrator's conclusions on the correct construction and effect of the conditions precedent and warranties in issue on the basis of assumed facts.
The Arbitrator's Second Partial Award dismissed A&A's claim under the policy on the basis that A&A had failed to satisfy the requirements of Condition Precedent 2 ("CP2") to which its right of indemnity under the policy was subject. CP2 required stock records to be kept and provided as follows:
"It is a condition precedent to the Underwriters liability under this Insurance that:
The Assured shall:
i. maintain and keep detailed records of all:
a) purchases, sales and other related transactions including purchase and sales invoices;
b) customers goods of others in the jewellery trade;
c) stock away from the premises, which shall be listed separately;
ii. maintain and keep all jewellers' memoranda and consignment agreements;
iii. take and record dated physical count inventories at not more than 12 (twelve) month intervals.
The records and documents required above shall be kept and maintained so that the Underwriters and/or their designated representatives can accurately determine therefrom for each item, ownership, acquisition date, the Assured's cost price, the sale price and date of sale, the estimated value of customers goods, the value of goods of others in the jewellery trade and the exact amount of any loss or damage without reference to the personal knowledge of the Assured or others and without reference to accounting calculations based upon information or materials other than a combination of the records required above."
Shortly prior to the hearing leading to the Second Partial Award (some ten months after the issue of the First Partial Award), A&A made a series of applications to the Arbitrator based on the contention that there was an issue as to whether there was a concluded contract between A&A and Zurich which incorporated the arbitration clause. The Arbitrator dismissed all of these applications for the reasons detailed in his Second Partial Award.
In the Arbitrator's Third Partial Award A&A was ordered to pay 90% of Zurich's costs and the Arbitrator's fees and expenses up to the date of the First Partial Award being issued and all costs, fees and expenses in the Arbitration thereafter. A&A has yet to pay Zurich's costs of the arbitration awarded against it. Zurich's total costs are said to be in the sum of £185,249.81.
The Claimant unsuccessfully sought to challenge the First and Second Partial Awards by way of Claim No 2012 Folio 1279. The application made under s.69 of the Arbitration Act 1996 ("the Act") was dismissed by Mr Justice Popplewell by Order dated 8 February 2013. He found that "there is no question of law on which the decisions are open to serious doubt". In relation to the applications made under s.67 and s.68 of the Act he observed that they appeared to have "no real prospect of success" and ordered that security for costs in the sum of £140,000 be provided, failing which they would be dismissed. No security was provided and the applications were dismissed by Order dated 8 March 2013.
At around the same time as it issued its arbitration applications A&A commenced the present proceedings. The "Brief details of claim" given were as follows:
"The Claimant's claim is for damages for breach of contract made between the Claimant and the 1 st and/or the 2 nd Defendant on about 14/9/06 and/or on the 2/10/06 and/or negligence arising out of or in connection with the aforesaid Defendants acting as insurance broker for the Claimant for the arrangement of insurance for his business and premises and interest thereon pursuant to Section 35A Senior Court Act 1981. Further the Claimant's claim is for damages for fraudulent representation and/or claim under Section 2 Misrepresentation Act 1967. Further the Claimant's case is for declaration that the 1 st and/or 2 nd Defendants were the agents of the 3 rd defendant and/or for damages for inducing breach of contract. See particulars of claim attached."
The Particulars of Claim attached were amended and substituted by lengthy Particulars of Claim dated 21 December 2012. The body of these Particulars of Claim runs to 73 pages and it is accompanied by 4 lever arch files of attachments.
The Amended Particulars of Claim as drafted is prolix and opaque. The precise causes of actions asserted and the basis for them is far from clear. However, the essence of A&A's pleaded case was helpfully summarised in its skeleton argument for the hearing.
As stated in the skeleton argument, A&A relies on the fact that Zurich's loss adjusters, Cunningham Lindsey, initially took no issue as to liability, but that in early August 2007 Alistair Jupp of Cunningham Lindsey sent an email to Mr Richards drawing attention to CP2. This is alleged to have triggered a sequence of events:
"19 …. Prompted by that email, Mr Richards and Towergate appreciated for the first time that the terms of the policy agreed between it and A & A did not contain such a condition whereas Zurich believed it did. Rather than come clean with Zurich as to his mistake, Mr Richards set about producing ex post facto policy documents which contained CP2.
20 Between 20.9.07 and 25.10.07, Mr Richards met with Mr Jain and Mr Santi of A & A at the Premises. He represented to them that it was necessary for the Proposal Document to be signed if Zurich was to pay out and Mr Jain, in the presence of Mr Santi, signed a document purporting to be the original proposal form. Mr Richards then handed them a copy of what purported to be the relevant policy dated 25.10.06 advising them to "you keep this safe"…. What they did not appreciate was that unlike the version they had agreed to in October 2006, this version contained CP2 and a mandatory arbitration clause (clause 21)….
21 On 25.10.07, Zurich (through Cunningham Lindsey) avoided its liability to indemnify A & A.
23 Labouring under the belief that the September/October 2007 version was the correct one, A & A commenced the arbitration before Colin Edelman QC.
23 A & A's present claim is based on the following propositions:
23.1 If and insofar as the relevant policy contained CP2 they had not been properly advised to that effect at its inception in October 2006
23.2 If and insofar as the relevant policy did not contain CP2 they were misled in September/October 2007 to believe that it did and thereby induced to participate in a costly and, ultimately, pointless arbitration. What they ought to have been doing was challenging Zurich on the true terms of the underlying contract;
23.3 When properly analysed, Mr Richards and Towergate were not simply acting for themselves in relation to the events in October 2006 and September/October 2007 but were acting as agents for Zurich.
24 In simple terms, A & A's complaints are of professional negligence and false representations."
The Defendants contend that, aside from the negligence claim against Towergate, all the issues sought to be raised in these proceedings have already been decided against them by the Arbitrator. Zurich contends that A&A is issue estopped from raising those same issues in these proceedings; alternatively it is an abuse of process to do so; alternatively the claims have no real prospect of success. Towergate and Mr Richards contend that, although they were not party to the arbitration, it is an abuse of process for those issues to be raised as...
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