Greene Wood and McLean v Templeton Insurance Ltd
| Jurisdiction | England & Wales |
| Judge | Mr. Justice Teare |
| Judgment Date | 26 October 2010 |
| Neutral Citation | [2008] EWHC 1593 (Comm),[2010] EWHC 2679 (Comm) |
| Docket Number | Case No: 2008 Folio 309,Case No: FOLIO 309 OF 2008 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 26 October 2010 |
[2008] EWHC 1593 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION COMMERCIAL COURT
Royal Courts of Justice
Strand, London, WC2A 2LL
MR. JUSTICE TEARE
Case No: 2008 Folio 309
Ronald Walker QC (instructed by CMS Cameron McKenna LLP) for the Claimant
Derek Sweeting QC (instructed by Manches LLP) for the Defendant
Hearing dates: 26 June 2008
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.
MR.JUSTICE TEARE
This is an application by the Defendant to set aside the order made by Walker J. on 14 March 2008 in which he granted permission for the Claim Form to be served out of the jurisdiction in the Isle of Man. The application notice relies upon two grounds, failure by the Claimant to make full and frank disclosure when seeking permission from Walker J. and the absence of reasonable prospects of success for the claim.
The Claim Form claims damages for breach of contract and an indemnity or contribution under the Civil Liability (Contribution) Act 1978. The particulars of the claim are set out in a separate document.
The claim in contract may be summarised as follows. The Claimant is or was a firm of solicitors acting on behalf of a large number of persons, formerly coal miners, who were seeking a Group Litigation Order against several firms of solicitors. The miners' claims against the firms of solicitors arose out of the solicitors' conduct of applications for claims for compensation under schemes established by the Department of Trade and Industry to compensate miners who had contracted vibration white finger or chronic obstructive pulmonary disease in consequence of their employment by the British Coal Corporation. In order to enable it to enter into conditional fee agreements (“CFAs”) with the miners so that the miners would be at no risk of having to pay costs the Claimant sought “after the event litigation insurance” (“ATE insurance”) from the Defendant for the benefit of the miners in about June 2005. Such insurance was obtained but it is alleged by the Claimant that there was also an agreement between the Claimant and the Defendant that in consideration of the Claimant agreeing to act on behalf of the miners under CFAs and “writing” (by which is meant arranging) ATE insurance with the miners on the Defendant's behalf pursuant to which the Defendant would be entitled to be paid premiums, the Defendant would honour its obligations under the policy issued by the Defendant to the miners.
On 18 May 2006 the miners were ordered by the High Court to pay costs to the firms of solicitors, the application for a Group Litigation Order having failed. The Defendant has failed or refused to indemnify the miners in respect of those costs. The Claimant says that it was therefore in breach of the guarantees it had given to the miners in the CFAs that they would not be liable to pay costs. The Claimant has since agreed to pay those costs thereby discharging the liabilities of the miners under the costs order. The Claimant now claims those costs from the Defendant pursuant to the alleged agreement between the Claimant and the Defendant.
The further or alternative claim under the Civil Liability (Contribution) Act 1978 is based upon the premise that the Claimant and the Defendant were liable to the miners in respect of the same damage and therefore the Claimant is entitled to a contribution or an indemnity from the Defendant in respect of the sums which it has paid to the miners in discharge of its liability.
The claim in contract
It is convenient to deal first with the question whether the claim in contract has any reasonable prospects of success. It is common ground that the merits threshold is the same as if the claimant were resisting an application by the defendant for summary judgment; see MRG (Japan) Limited v Engelhard Metals Japan Limited [2003] EWHC 3418 Comm., [2004] 1 Lloyds Rep.731 per Toulson J. at paragraph 10. In essence the question is whether there is a serious issue to be tried as to the claim in contract.
The facts which are said to give rise to the alleged contract are pleaded in paragraphs 5–8 of the Particulars of Claim. They are as follows:
“5. At a meeting in Douglas, Isle of Man, in late June Mr. Edwards [a partner in the Claimant] asked Mr. Brunswick [the managing director of the Defendant] if the Defendant would be interested in providing ATE insurance for the coal mining cases (the miners' claims). Mr. Brunswick said that he had read about the cases and would insure them and he instructed Mr. Maule [the underwriting manager of the Defendant] to arrange the insurance.
Acting on the basis of that agreement Mr. Edwards proceeded to prepare documentation to be used for the miners to enter into CFAs with the Claimant.
This documentation included a document headed “Mineworkers' Group Action….the GWM Guarantee to Clients”. The Claimant will refer to this document for its full terms and effect. In its final form it included the following:
(1) The GWM Guarantee to clients;
(2) No win, no fee, no risk, no cost!;
(3) We, Greene Wood & McLean LLP confirm to our clients that we will handle their claims in relation to the above matter on the basis that …….
2) We have obtained a policy of After The Event Litigation Expense Insurance for our clients underwritten by Templeton Insurance Limited a regulated insurer of Douglas Isle of Man;
3) The policy will cover adverse costs, own disbursements and the insurance premium….Below I set out what the costs implications are – win or lose …………….
b) Lose….ii) Disbursements – these are recoverable from the insurance policy …iv) Adverse costs – this is recoverable from the insurance policy.
8.The above document was submitted in draft to Mr. Maule who approved it subject to an amendment suggested by him (which was at paragraph 3(a)(iii) of the document). Having approved the documentation, Mr. Maule authorised the Claimant, on behalf of the Defendant, to enter into agreements with the miners whereby they became parties to the policy to be issued by the Defendant (“the Policy”). ”
It has been submitted that these pleaded facts are sufficient to give rise to the suggested agreement between the Claimant and the Defendant. Counsel put the matter in this way in his skeleton argument:
“Applying either or both of the business efficacy test and the officious bystander test, in agreeing with the Claimant that the latter would (a) be authorised to bind its clients to contracts of ATE insurance with the Defendant, and (b) give its clients the GWM Guarantee the Defendant must be taken to have agreed that it would meet valid claims under the Policy. This was an obligation owed to GWM, not merely to the individual insureds.”
In his oral submissions counsel explained that it was an implied term of the agreement pleaded in paragraph 8 (whereby the Defendant authorised the Claimant, on behalf of the Defendant, to enter into agreements with the miners so that they became parties to the policy to be issued by the Defendant) that the Defendant owed a contractual duty to the Claimant to meet valid claims made under the policy.
This term was said to be implied either on grounds of business efficacy (ie that it is necessary to imply the term in order or make the contract work) or on the grounds that if an “officious bystander” had suggested to the parties that express provision be made for the Defendant to owe a contractual duty to the Claimant that it would meet valid claims under the policy by the miners they would both have replied “of course, that is obvious”.
I should add that it was also said that the term was to be implied in the agreement pleaded in paragraph 5. However, paragraph 5 is hardly expressed in the language of a binding and enforceable contract. All that Mr. Brunswick is alleged to have said is that “he had read about the [miners'] cases and would insure them and he instructed Mr. Maule to arrange the insurance.” As pleaded this is no more than the expression of a willingness to provide ATE insurance to the miners coupled with an instruction to his underwriting manager to arrange the insurance. It is not alleged that the terms of the ATE insurance to be issued had been discussed, let alone agreed. Such matters would be for Mr. Maule, the underwriting manager, to agree.
I accept however that paragraph 8 raises a serious issue to be tried that Mr. Maule, acting on behalf of the Defendant, entered into a binding and enforceable contract to authorise the Claimant to enter into agreements with the miners whereby they became parties to the policy to be issued by the Defendant.
However, I consider it unarguable that it was necessary, in order to make the contract work, to imply a term in the contract pleaded in paragraph 8 that the Defendant owed a contractual duty to the Claimant to meet valid claims made by the miners under the policy.
By authorising the Claimant to bind the miners to the ATE insurance the Defendant agreed to be brought into contractual relations with the miners upon the terms of the ATE policy so that the miners had a right to sue the Defendant upon its terms. By approving the terms of the guarantee of “no win, no fee, no risk” the Defendant agreed that the guarantee may be issued. It is not necessary, in order to make the contract pleaded in paragraph 8 work, to imply in it a term enforceable by the Claimant that the Defendant would honour its obligations under the policy to the miners. That is because the Claimant was enabled to give its guarantee to the miners by the Defendant's agreement that the miners would have an enforceable claim against the Defendant to be...
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