De Meza & Stuart v Apple van Straten Shena & Stone

JurisdictionEngland & Wales
JudgeLORD JUSTICE MEGAW,LORD JUSTICE ROSKILL,LORD JUSTICE ORR
Judgment Date23 January 1975
Judgment citation (vLex)[1975] EWCA Civ J0123-4
CourtCourt of Appeal (Civil Division)
Date23 January 1975

[1975] EWCA Civ J0123-4

In The Supreme Court of Judicature

The Court of Appeal

(Revised)

Civil Division

(From) Mr. Justice Brabin - London)

Before:

Lord Justice Megaw

Lord Justice Orr and

Lord Justice Roskill

Louis Sydney de Meza and George Stuart
and
Maurice Apple, Martin Van Straten, Aubrey Shena And Harold Stone (Carrying on practice as a firm under the style and name of Maurice Apple & Co.)

Mr. OWEN STABLE, Q. C. and The Hon. CHRISTOPHER BATHURST (instructed by Messrs. Reynolds Porter, Chamberlain & Co.) appeared on behalf of the Appellants (Defendants).

Mr. MICHAEL EASTHAM, Q. C. and Mr. LIONEL SWIFT (instructed by Messrs. L.8. de Meza, Jonas & Partners) appeared on behalf of the Respondents (plaintiffs).

LORD JUSTICE MEGAW
1

I shall ask Lord Justice Roskill to deliver the first judgment.

LORD JUSTICE ROSKILL
2

I would like to begin this judgment by expressing deep gratitude to junior counsel on both sides, and particularly to Mr. Swift, for the magnificent note of the evidence of the two principal witnesses involved at the trial with which he and Mr. Bathurst have supplied the Court. When this appeal was mentioned to this Court last week, it appeared that by an unfortunate oversight on the part of the appellants' solicitors a transcript of the shorthand note of the evidence had not been ordered, and an application for an adjournment was then made. Fortunately it was not necessary to grant that adjournment because of counsel's note which was available, supplemented by the note of the learned trial judge, Mr. Justice Brabin. When I say that the note of the two chief witnesses has been typed and occupies 150 pages of typescript, it will be appreciated how indebted the Court is for the midnight oil which must have been burned over many evenings in preparing that note, thus the saving of the time of the Court.

3

The appeal is brought from a judgment of Mr. Justice Brabin given in London on the 28th February last year. The learned Judge tried, over a period of twelve days, an action brought by a firm of solicitors, with one office in Bishopsgate and another office in Sidcup in South London, against their former accountants for broach of duty - that is to say breach of a contractual duty - owed by those accountants to the solicitors.

4

The claim arose in somewhat unusual circumstances, into which it will be necessary to go in some detail. Suffice it to say now that, amongst the Insurance cover possessed by the plaintiff firm, was a consequential-loss policy which insured them (putting it compendiously at this juncture) against lose of earnings caused by fire.That policy included a clause which required the assured, after the conclusion of each financial year, to submit a certificate, the overt purpose of that clause being to enable the assured, if the sum insured proved to be too high in relation to the earnings of the firm in the preceding financial year, to recover any overpaid premiums. But, as was admitted in evidence by the defendants' accountant Mr. Stone, who was the person alleged to have been guilty of a breach of duty, the provision for that certificate also served the purpose of enabling any under-insurance by the plaintiffs to be ascertained.

5

There are three certificates involved in this case. They will be found in Bundle VIII. The certificate known as the first certificate is at page 1 of that bundle: it is dated 13th March, 1963. The certificate known as the second certificate appears on both pages 2 and 3 of that bundle, the first of those pages being a copy of the certificate retained by the defendant accountants, the second being a copy of the completed certificate which was obtained from the file of the insurance company concerned, the Norwich Union. The third certificate will be found on the last page of that bundle. Whereas the second certificate relates to the year ending April, 1966, the last certificate was intended to relate to the year ending April, 1967. The first and second certificates were completed by the defendant accountants; the third certificate was never completed, in circumstances which I shall have to relate.

6

As I have already said, the plaintiffs had offices both in Bishopsgate and in Sidcup. The story goes back as far as 1954. At that time the plaintiffs' auditors were a firm called Stoy Hayward. Stoy Hayward remained the plaintiffs' auditors down to the end of their financial year in April, 1957. Then a firm called Newman & Co. took over for the next three years, ending in April 1960. Thereafter, beginning with May, 1960, the defendant accountants tookover as auditors and each year did the accounts of the plaintiffs and, we were told (though it is not relevant for present purposes) also did the accounts which the law Society require to be completed by auditors.

7

Of course, with a matter which goes back a very long way, documents have inevitably disappeared. At an early stage the plaintiff a had certain insurance policies. As far back as over twenty years ago, in 1953, they had one with the Norwich Union. We have not got a copy of that policy, but there apparently were found during the trial certain documents from which junior counsel were able to reconstruct (if that Is the right word) the first proposal form which was used in order to obtain that policy for the early years of this story. Subsequently the Norwich Union, for reasons one can well understand, wanted to re-write their policies. That Involved putting forward forms of policy containing other provisions than those which had been contained in the original and now no longer existing policies. There was, it seems, an interview between the senior partner of the plaintiff firm, Mr. de Meza, and Mr. Coates of the Norwich Union. Not surprisingly, nobody precisely remembers the exact details of that meeting; but as a result, a fresh proposal form was signed, and following that the policy now in question was brought into existence.

8

It is worth saying a word about the two proposal forms. The first one, it is to be observed, described the Insured as "L. de Meza" and his business as "Solicitor". When one comes to what is page 2 of the copy before us, the insurance to be effected is described thus: "Lose of profit resulting from fire, explosion, aircraft, riot, earthquake…. Sum to be Insured" (and then this has been "blocked In" by somebody else afterwards) "£2,000 LOSS OF FEES representing twelve months' Net Profit, plus twelve months' Standing Charges as shown below". The standing charges there shown are whatone might describe as the usual standing charges - rent, rates, interest on borrowed capital, salaries to permanent staff; and so on. When the second proposal form was filled in, when Mr. Coates saw Mr. de Meza, one finds this in the comparable part: "Consequential Loss, loss of Gross Pees and Additional Expenditure incurred as a result of Fire and Other Perils". Mr. Stable, for the appellant accountants, at one point In his argument relied on the fact that, whereas the original insurance was on loss of fees plus standing charges (the two together roughly squalling the gross earnings of the firm), the second proposal form was expressed to be on lose of gross fees and additional expenses.

9

Following the completion of that proposal form, a policy, known as a "Single" policy, was brought into existence. It was numbered "P647AM001". It was known at the trial as the "647" policy, to distinguish It from the earlier policy. It was called a "Single" Insurance for this reason. The subject-matter of the policy as a whole was various; but, in conformity with what I believe to be modem practice, the insurance company, no doubt in order to avoid too much paper, wanted to have the various risks which they insured Incorporated into a "single" policy: hence the name.

10

It is necessary to read from this policy, because without so doing a number of matters may not be clear. I can start on page 2 of Bundle VII, which is the policy, and read the third paragraph. "The Company agree subject to the terms and conditions both General and special contained in or endorsed or otherwise expressed on this Policy to insure in the manner and to the extent hereinafter provided in the respective Sections specified in the Schedule…. in respect of events occurring during the Period of insurance specified in the Schedule or during any subsequent period for which the insured Shall pay and the Company shall agree to accept the premium required for the renewal of this Policy". Turning to page 3, one finds theschedule. The period of the insurance is stated to be from 10th April, 1964, to 30th April, 1965. The schedule specifies no less than twelve different sections, nine completed, the last three uncompleted. Not all those nine insurances were required by the plaintiffs. The relevant insurance for present purposes is that numbered "2", "Consequential Loss following Fire and additional Perils"; and the first premium was stated to be just over £16 and the annual premium £15. 14s. 0d. The first section was a fire policy pure and simple, if I may use that phrase, on office furniture, on deeds, and on certain other property. Mr. stable in his reply made some reference to that section; but, with respect, it is to my mind irrelevant for the purposes of the present appeal because that section is on certain physical property only and has nothing Whatever to do with the subject-matter of the present appeal.

11

I can pass from that to the all-important second section, which bears at the top the rubric "Consequential Loss" and reads: "In the event of any building or other property or any part thereof used by the insured at the Premises for the purpose of the Business being destroyed or damaged by (l) Fire…. The Company will pay to the insured in respect of each item in the Appendix to this Section the amount of loss resulting from such interruption or interference in accordance with the...

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14 cases
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    ...B referred to Daniels v Anderton (1995) 37 NSWLR 438: referred to De Meza and Stuart v Apple, Van Straton, Shena and Stone [1974] 1 Lloyd's Rep 508 (QB): referred Donoghue v Stevenson [1932] AC 562: referred to Dukes v Marthinusen 1937 AD 12: referred to C Emslie v African Merchants Ltd 190......
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  • Forsikringsaktieselskapet Vesta v Butcher
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    ...plea of breach of warranty barred the power to apportion under the 1945 Act. Further he relied on the case of De Meza v. Apple (1974) 1 Lloyd's Law Reports 508; in that case solicitors claimed damages for negligence and/or breach of contract against auditors. Brabin J. held that where a br......
  • Alexander v Perpetual Trustees Wa Ltd
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    ...245–255. 74 The Committee referred to Belous v Willetts [1970] VR 45; A S James Pty Ltd v C B Duncan [1970] VR 705; De Meza v Apple [1974] 1 Lloyd's Rep 508: Victoria, Chief Justice's Law Reform Committee, Contribution, (1979), pars 10.1–10.2. See now Astley v Austrust Ltd (1999) 197 CLR 75......
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1 books & journal articles
  • APPORTIONMENT OF DAMAGES FOR BREACH OF CONTRACT
    • Singapore
    • Singapore Academy of Law Journal No. 1991, December 1991
    • December 1, 1991
    ...The earlier it is clarified, the better. 1 Forsikringsaktieselskapet Vesta v Butcher [1988] 2 All ER 43 at 62 per Ormrod LJ (CA). 2 [1975] 1 Lloyd’s Rep 498 at 509. 3 [1986] 2 All ER 488 at 508. 4 [1936] 1 KB 399 at 405. 5 Above, fn 3 at 508, 509. 6 [1985] 1 All ER 20. 7 [1980] 2 NZLR 550. ......

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