Beecham Peacock Solicitors LLP v Enterprise Insurance Company Plc and Others
| Jurisdiction | England & Wales |
| Judge | Judge Behrens |
| Judgment Date | 03 July 2014 |
| Neutral Citation | [2014] EWHC 2194 (QB) |
| Court | Queen's Bench Division |
| Date | 03 July 2014 |
| Docket Number | Case No: A40L5275 |
[2014] EWHC 2194 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
LEEDS DISTRICT REGISTRY
The Court House
Oxford Row
Leeds LS1 3BG
His Honour Judge Behrens sitting as a Judge of the High Court in Leeds
Case No: A40L5275
David Lamb partner of the Claimant for the Claimant
Michael Ozon Director of Ozon Solicitiors Ltd for the First and Second Defendant
The Third Defendant did not attend and was not represented
Hearing date: 9 June 2014
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
The Claimant ("BPL") is a limited liability partnership. It is a successor practice of Beecham Peacock Solicitors ("BPS") and as I understand it has assumed the rights and liabilities of that firm.
The First and Third Defendants are insurance companies trading out of Gibraltar. The Second Defendant is an insurance company trading out of the Isle of Man. All 3 insurers of underwriting after the event legal insurance ("ATE policies").
BPS acted for a number of clients in respect of personal injury actions that failed. In each case it entered into a Conditional Fee Agreement ("CFA") with the client. In each case the client entered into an ATE policy with one or other of the Defendants.
In these proceedings BPL seeks to recover legitimately incurred disbursements incurred on behalf of its clients. The sums involved are significant. The total claim is £221,171.95 claimed as to £145,668.78, £47,081.73 and £28,421.44 from the First, Second or Third Defendants.
The principal application before the Court is an application to strike out the claims on two main grounds. First it is said that as BPS was not a party to the insurance policies it has no right of action against the insurers. Second it is said that in breach of reg 4(2)(e)(ii) of the Conditional Fee Agreements Regulations 2000 ("the 2000 Regulations") BPS failed to disclose its interest in recommending the contract of insurance.
BPL seeks to meet these arguments in a number of ways. First it is contended that there is a direct right of action against the insurer. This is either as a result of a direct contract or by subrogation or restitution. If there is no direct right of action there is an application to join each of the lay clients as parties. Second it is said that there is no breach of reg 4(2)(e)(ii).
In so far as the claim is not struck out there are a number of applications to be dealt with.
Summary Judgment/Strike out
The principles applicable are summarised in the judgment of Lewison J (as he then was) in Easy Air Limited v Opal Telecom Limited [2009] EWHC 339
i) The court must consider whether the claimant has a "realistic" as opposed to a "fanciful" prospect of success: Swain v Hillman [2001] 1 All ER 91;
ii) A "realistic" claim is one that carries some degree of conviction. This means a claim that is more than merely arguable: ED & F Man Liquid Products v Patel [2003] EWCA Civ 472 at [8];
iii) In reaching its conclusion the court must not conduct a "mini-trial": Swain v Hillman;
iv) This does not mean that the court must take at face value and without analysis everything that a claimant says in his statements before the court. In some cases it may be clear that there is no real substance in factual assertions made, particularly if contradicted by contemporaneous documents: ED & F Man Liquid Products v Patel at [10];
v) However, in reaching its conclusion the court must take into account not only the evidence actually placed before it on the application for summary judgment, but also the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v Hammond (No 5) [2001] EWCA Civ 550;
vi) Although a case may turn out at trial not to be really complicated, it does not follow that it should be decided without the fuller investigation into the facts at trial than is possible or permissible on summary judgment. Thus the court should hesitate about making a final decision without a trial, even where there is no obvious conflict of fact at the time of the application, where reasonable grounds exist for believing that a fuller investigation into the facts of the case would add to or alter the evidence available to a trial judge and so affect the outcome of the case: Doncaster Pharmaceuticals Group Ltd v Bolton Pharmaceutical Co 100 Ltd [2007] FSR 63;
vii) On the other hand it is not uncommon for an application under Part 24 to give rise to a short point of law or construction and, if the court is satisfied that it has before it all the evidence necessary for the proper determination of the question and that the parties have had an adequate opportunity to address it in argument, it should grasp the nettle and decide it. The reason is quite simple: if the respondent's case is bad in law, he will in truth have no real prospect of succeeding on his claim or successfully defending the claim against him, as the case may be. Similarly, if the applicant's case is bad in law, the sooner that is determined, the better. If it is possible to show by evidence that although material in the form of documents or oral evidence that would put the documents in another light is not currently before the court, such material is likely to exist and can be expected to be available at trial, it would be wrong to give summary judgment because there would be a real, as opposed to a fanciful, prospect of success. However, it is not enough simply to argue that the case should be allowed to go to trial because something may turn up which would have a bearing on the question of construction: ICI Chemicals & Polymers Ltd v TTE Training Ltd [2007] EWCA Civ 725.
This approach was recently approved in the judgment of Floyd LJ in TFL Management v Lloyds TSB Bank plc [2014] 1 WLR 2006.
The Contractual Arrangements
In order to understand the nature of the claim it is necessary to summarise the various contractual arrangements existing between the various parties involved.
Freeclaim IDC plc ("FIDC")
FIDC is described in the evidence as a "claims farming operation" based in Ashington Northumberland in respect of personal injury victims. It acted as agent for the Insurers for the purpose of managing and administering the ATE policies issued by the Insurers in respect of FIDC claims.
The nature of the operation can be seen from the documentation issued to its clients. The letter which is written to the client sets out the service. In summary FIDC will
1. select a specialist firm of solicitors from its panel to advise about the claim"
2. provide a FIDC ATE policy to protect the client against liability for costs and any other expenses if the claim is unsuccessful.
3. Arrange a variable rate bank loan to make sure that the solicitor can meet costs and expenses. There is a limit of £300 to cover the interest on the loan.
4. charge the solicitor (a referral fee) £300 for this work.
BPS were one of 4 firms of solicitors in the north east who were members of the FIDC panel of solicitors.
The variable rate bank loan
The bank loan was governed by an agreement between FIDC, BPS and Hampshire Trust plc dated 18 December 2002. It is not necessary to refer to the agreement in detail. In the course of his submissions Mr Ozon drew my attention to recital C and clause 2.1 which make it clear that the lending is provided to the personal injury client and not BPS.
CFA
I was shown a number of CFA's made between BPS and its clients. Amongst the points made by Mr Ozon are the following:
If you lose you pay your opponent's charges and disbursements. You may be able to take out an insurance policy against this risk.
Immediately before you signed this agreement we verbally explained to you the effect of this agreement and in particular the following:
In all the circumstances on the information currently available to us we believe that a contract of insurance with FIDC is appropriate. Detailed reasons for this are in Schedule 2
We confirm that we do not have an interest in recommending this particular insurance agreement.
The Law Society Conditions (which were incorporated) include the following:
If you are insured against payment of these amounts by your FIDC insurance policy we will make a claim on your behalf and receive any resulting payment in your name.
The ATE policies
I was shown two of the ATE policies, one between the First Defendant and the client and the other between the Second Defendant and the client.
Although the wording of the two policies is different the effect is substantially the same.
In the First Defendant's policy the Insurer (subject to exceptions) agreed to indemnify the insured against, inter alia, own disbursements (as defined).
The definitions make it clear that:
1. The Insured is an individual who has entered into … a CFA with the Appointed Representative.
2. the Appointed Representative is the panel solicitor (in this case BPS)
3. Own disbursements means disbursements … reasonably and properly incurred by the Appointed Representative and/or the Insured in the conduct of the proceedings on behalf of the Insured.
It is to be noted that although the wording is somewhat convoluted under clause 9 appears to exclude BPS's right to enforce the agreement under Contracts (Rights of Third Parties) Act 1999 ("the 1999 Act")
In the Second Defendant's policy the Insurer (subject to exceptions) also agreed to indemnify the insured against, inter alia, disbursements which the Insured had incurred (as...
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