Eurokey Recycling Ltd v Giles Insurance Brokers Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Blair |
| Judgment Date | 12 September 2014 |
| Neutral Citation | [2014] EWHC 2989 (Comm) |
| Docket Number | Case No: 2013 FOLIO 125 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 12 September 2014 |
[2014] EWHC 2989 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Justice Blair
Case No: 2013 FOLIO 125
Michael Davie QC and Richard Osborne (instructed by Freeth Cartwright LLP) for the Claimant
Neil Calver QC and Michael Bolding (instructed by Plexus Law LLP) for the Defendant
Hearing dates: 10, 11, 12, 16, 17, 18 June
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.
This is a brokers' negligence claim for breach of contract and/or negligence which is brought by Eurokey Recycling Ltd against its former insurance brokers following a fire at Eurokey's main premises at Enderby, Leicestershire, on 2 May 2010. The defendant brokers are Giles Insurance Brokers Ltd, and the claim is in respect of a commercial combined policy arranged by Giles with a Lloyds syndicate acting through its agent Paladin Underwriting Agency Ltd. This covered, amongst other things, business interruption risks for the period 13 April 2010 to 12 April 2011, and a major part of Eurokey's case relates to the business interruption cover. On 21 February 2014, it was ordered by Judge Mackie QC that the trial was to be of liability only.
Eurokey claims that it was under-insured because Giles negligently advised it, and failed to arrange adequate levels of cover, causing insurers to threaten avoidance of cover by reason of under-insurance. Its case is that if it had been properly advised by Giles, it would have been fully insured, and its claim is for the shortfall between the settlement it reached with insurers and the sum which it says it would have recovered had it been properly advised and insured, together with consequential losses. Giles denies all allegations of negligence, and says that the insurance was arranged on the basis of specific instructions received from Eurokey. It says that Eurokey cannot prove causation and could not have obtained cover on the basis it contends should have been arranged, and that any damages must be substantially reduced for contributory negligence.
The trial
The factual witnesses who gave evidence on behalf of Eurokey were Mr Harinder Singh Dhillon, known as John Dhillon, its owner and managing director, and Mr Joseph Bisland, its former commercial director who had responsibility for arranging Eurokey's insurance in 2009 and 2010. The factual witnesses who gave evidence on behalf of Giles were Mr Richard Evans, the insurance broker responsible for arranging Eurokey's insurance, and Mr Tom Brooke, an insurance broker who assisted him in 2010 (and who had little recollection of the relevant events).
The key witnesses were Mr Bisland and Mr Evans. Mr Evans is an insurance broker of some 35 years experience, and was on the whole a good witness, though he did not seek to maintain his witness statement evidence in all respects.
Eurokey says that Mr Bisland was "transparently honest" and gave what was clearly honest evidence that his previous involvement with business insurance had amounted to operational matters such as checking compliance with survey requirements. His demeanour when giving evidence, Eurokey says, was of a straight-forward down-to-earth businessman.
Giles mounted an attack on the evidence of Mr Bisland, saying that he has given false evidence to the court about "a whole host of issues", a substantial list of such alleged falsehoods being provided in Giles' written closings. Some of these, in my view, amounted to disagreements on the evidence. I do not accept that Mr Bisland came to court to give dishonest evidence, and I generally consider that he sought to assist the court with his evidence as best he could. He was understandably defensive about aspects of the insurance he was responsible for as commercial director of Eurokey, and while there was a tendency (sometimes on the claimant's side as well I felt) to try to attach exclusive blame to him for the under-insurance that happened in this case, I do not accept an analysis along those lines. In some respects it seems to me that he did a considerably better job for Eurokey than had been done before.
There are, however, some aspects of his evidence which I do not accept, and which I identify below. There are also some aspects that I cannot regard as truthful, and these were principally his evidence as to what he says he told Mr Evans about turnover prior to the insurance being placed in 2010, his evidence as to the source of figures which he himself sent on to other insurers in an effort to find cover at lower rates than Giles had found, and his evidence as to the reason for sending the company's draft accounts to Mr Evans. These I consider are significant in terms of his credibility, and where their evidence differs, I prefer that of Mr Evans.
Giles also sought to portray Mr Bisland as a "sophisticated businessman" who "clearly understood commercial insurance" when he joined Eurokey full time as commercial director in January 2009. It makes these points to support its case that an insurance broker needs to direct its explanations to a particular client, and if that client has a good understanding of the relevant insurance concepts, very little explanation needs to be given. It seeks findings of fact that Mr Bisland had experience of commercial insurance prior to joining Eurokey, and was fully aware of (i) the nature and implications of the duty of disclosure, (ii) the fact that stock and machinery should be insured on a reinstatement basis, (iii) the method of calculating the sum insured for business interruption cover, and (iv) the concept of floating cover.
The position is that prior to joining Eurokey, Mr Bisland had been working in Scotland for a timber company and a packaging company. He had managerial roles with both, and was managing director of the packaging company. The impression I got was that he came in to Eurokey to add structure to the company's operation (the management he said was essentially him and Mr Dhillon working out of a small office on site). However, though he was experienced in business, it would be misleading to describe him as a "sophisticated businessman", and between the two, Mr Evans was in my view the more sophisticated.
Mr Dhillon's evidence was to the effect that he thought that Mr Bisland had some previous experience of commercial insurance, but would expect him to have the benefit of expert advice from the brokers where necessary. Mr Bisland accepted that as commercial director, arranging the company's insurance was his task. However, he said that he was not familiar with the details of placing commercial insurance, and specifically not with business interruption insurance. I find that Mr Bisland did have experience of commercial insurance, but only in an operational sense, as he said. There is no evidence that he had any experience of business interruption cover. I decline therefore to make the findings of fact that Giles seeks in this regard, though I accept that Mr Bisland was aware of the nature and implications of the duty of disclosure, the fact that stock and machinery should be insured on a reinstatement basis, and in general terms the concept of floating cover, none of which present any difficulties to an experienced business person like him, as he indeed effectively accepted in cross-examination.
However, as I have said he was brought into the company because of his experience. Mr Dhillon agreed in cross-examination that he was satisfied that Mr Bisland had everything in hand "insurance-wise once he began his work", and also agreed that if Mr Bisland gave him that impression, no doubt he gave that impression to Mr Evans as well. Whilst I do not think this experience bears the weight that Giles seeks to place on it, I consider that it played its part with Mr Evans, and certainly justified Mr Evans in not challenging the figures that Mr Bisland gave him.
Expert broking evidence was given by Mr Barry Hammond on behalf of Eurokey, and Mr Robin Wood on behalf of Giles. Both are well qualified, and their evidence was of assistance to the court. There was in the end little relevant difference between them as to the standards expected of a competent insurance broker.
The facts
The facts as I find them are as follows. Eurokey is a waste recycling company established in 1995, and owned and run by Mr Dhillon. Its turnover rose over the period encompassed in this case from about £3.2m in 2005 to £16.8m for year ended 31 August 2009 (the last set of accounts relevant at trial), though the trend was not uniformly upwards. There are a number of other companies in the group, but Eurokey is the most important. In 2008, Eurokey acquired further premises in Lount, also in Leicestershire, but the centre of the company's operations has at all material times prior to the fire been at Enderby.
Mr Evans is, as indicated above, an experienced broker, who joined Giles, which is a major firm of brokers (it has since been acquired by another business) in 2004. He had already been acting for Mr Dhillon and Eurokey, and on his move to Giles, he took the account with him. The company's insurance year ran from April to April.
So far as the evidence at trial is concerned, details of Eurokey's insurance begin in 2005/6, the policy including stock, machinery and business interruption cover. The BI sum insured was £350,000 declaration-linked on a gross profit basis with a twelve month indemnity period, as it remained throughout. In 2007 the insurance was placed with Quinn Insurance Ltd, and business interruption cover at that...
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