Mulsanne Insurance Company Ltd v Marshmallow Financial Services Ltd
| Jurisdiction | England & Wales |
| Judge | Sir Anthony Mann |
| Judgment Date | 11 February 2022 |
| Neutral Citation | [2022] EWHC 276 (Ch) |
| Docket Number | Case No: IL-2021-000014 |
| Year | 2022 |
| Court | Chancery Division |
[2022] EWHC 276 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
INTELLECTUAL PROPERTY LIST (ChD)
Royal Courts of Justice
Rolls Building, 7 Rolls Buildings
Fetter Lane
London EC4A 1NL
Sir Anthony Mann
Case No: IL-2021-000014
Martin Howe QC, Aidan Christie QC, Martyn Naylor, and Ashton Chantrielle (instructed by Hogan Lovells International LLP) for the Claimant
Jonathan Hough QC and Jonathan Moss (instructed by Norton Rose Fulbright) for the Defendant
Hearing dates: 15 th–19 th, 22 nd–25 th, 29 th–30th November, 6 th–7 th December 2021
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 judgment was handed down remotely by circulation to the parties' representatives by email. It will also be released for publication on BAILII and other websites. The date and time for hand-down is deemed to be Friday 11 th February 2022 at 10am.
| TABLE OF CONTENTS WITH HYPERLINKS |
| PART I – INTRODUCTORY AND GENERAL |
| Introduction and facts in outline |
| Procedural history |
| Witnesses |
| Claimant — Mr Darren McCauley |
| Claimant — Mr Timothy Rourke — expert witness |
| Defendants — Mr Alexander Kent-Braham (“AKB”) |
| Defendants — Mr Oliver Kent-Braham |
| Defendants — Dr Timothy Holliday |
| Defendants — Ms Paula Coulthard |
| Defendants — Mr Gary Hemming |
| Defendants — Mr James Hillon — expert witness |
| Motor insurance policies — general matters and techniques for calculating premiums |
| The background to and implementation of the relationship between Mulsanne and Marshmallow |
| Add-on services and facilities provided to customers by Marshmallow; and methods of payment of premiums |
| The claims and issues in the case in outline, and their development |
| PART II – THE CONFIDENCE CLAIMS |
| Misuse of confidential information — the relevant law |
| The actual confidence claims — general |
| Item DM-2.3A — Amendments to the First Defendant's Occupation file sent by Claimant (D McCauley) to G Hemming on behalf of First Defendant on 1 June 2018; |
| And DM-2.3B — First Defendant's Occupation file incorporating amendments by Claimant, sent by G Hemming on behalf of First Defendant to Claimant (D McCauley) on 20 June 2018 |
| The factual background |
| Items DM-2.3A and DM-2.3B — confidentiality and misuse |
| Item DM-2.4 — Claims and Convictions rating table provided by the Claimant (D McCauley) to First Defendant (A Kent-Braham) on 22 June 2018 |
| Item DM-2–5 — Vehicle Segmentation File provided by Claimant (G Preedy) to First Defendant (A Kent-Braham) on 14 September 2018 |
| Item DM-2.6 — Revised Rating Model sent by Claimant (G Preedy) to First Defendant (A Kent-Braham) on 22 June 2018 |
| The underwriting rules set from DM-2.6 |
| Use of DM-2.6 in formulated exclusions in underwriting guidelines |
| Underwriting rules — exclusions — ongoing use |
| Conclusions on DM-2.6 |
| Item DM-2.9 — Revised Underwriting Rules relating to No Claims Discount sent by Claimant (G Preedy) to First Defendant (A Kent-Braham; O Kent-Braham) on 23rd January 2019 |
| DM-2.10 — Revised Postcode File sent by Claimant (G Preedy) to First Defendant (A Kent-Braham; O Kent-Braham on) 25 April 2019 |
| Item DM-2.11 — Underwriting Rules relating to Disclosure of No Claims Discount sent by Claimant (G Preedy) to First Defendant (A Kent-Braham) on 30 April 2020 |
| Item DM-2.12 — Underwriting Rules for “Open Banking” insurance product sent by Claimant (S Dragne) to First Defendant (A Kent-Braham) on 18 May 2020 |
| Item DM-2.13 — Pricing specification for “Open Banking” insurance product sent by Claimant (S Dragne) to First Defendant (A Sealy; A Kent-Braham) on 2 June 2020 |
| Credit scores |
| Springboard claims |
| Springboard claim 1 — the Question 1(a) point |
| Springboard claim — postcode files — comparison exercise |
| Springboard claim — analyses to support activities of Ms Coulthard |
| Springboard claim — what was in the engine as at November 2020 |
| Additional Confidential Disclosures |
| PART III — TOBA CLAIMS The terms of the TOBA The issues on the TOBA claim Mulsanne's first termination case Mulsanne's further termination cases Termination on the basis of a business transfer Other termination claims Termination — data protection points Termination — audit complaints |
| Termination — misuse of confidential information Post-termination breaches |
| Post-termination breaches — the contract and the law Post-termination — credit checks etc Post-termination breaches — add-on products |
| Post-termination breaches — policyholders' credit card payment information Post-termination liabilities — Premium Finance (Premfina) Post-termination breaches — open banking data |
| Clause 19.3.1 — whether positive obligations arise — and implied terms Causation points |
| PART IV — THE PASSING OFF CLAIM The passing off claim |
| Passing off — the main facts |
| Passing off — relevant law |
| Passing off — conclusions and findings |
| Conclusions |
| ANNEX — THE TOBA — RELEVANT TERMS |
PART I – INTRODUCTORY AND GENERAL
Introduction and facts in outline
This is a judgment given after trial of liability in relation to a dispute between the claimants (an insurance company — “Mulsanne”) and its former broker/intermediary (the first defendant — “Marshmallow”) and the latter's related insurance company (the second defendant — “Marshmallow Insurance”) about the alleged misuse of confidential information said to have been supplied to Marshmallow by Mulsanne during the course of their relationship, and the circumstances in which the relationship ended. An outline of the circumstances and nature of the dispute is as follows — an outline will help to navigate the complex facts which will have to be recited later.
In what follows it will occasionally be necessary to refer to the two defendants at the same time. Where that happens I shall, for the sake of convenience, call them compositely “Marshmallow”. It will be obvious where that expression is used in that way as opposed to its being used to describe Marshmallow the first defendant.
In 2017 Dr Tim Holliday and others formed Marshmallow as a broker for motor insurance policies, intending to deploy technology to enhance the customer's experience and enhance the profitability of the insurance product it sold. It developed a ratings engine (a series of tables in a spreadsheet coupled with some underwriting rules) which it considered would achieve those objectives (when properly implemented) and hoped to engage an insurer called Hiscox UK as the underwriter who would provide the “capacity” — underwriting for the policies which Marshmallow would sell. Unfortunately Hiscox pulled out at a relatively late stage and Marshmallow had to find another underwriter to provide capacity. Contact was made with Mulsanne and they both agreed that they could work together to target in particular the migrant market, a sector of the market which they considered to be under-served by the rest of the market and which would yield, or contribute to, a profitable enterprise for both of them. Hitherto Mulsanne had specialised in the higher premium section of the market — for example, drivers with disqualifications or expensive cars. The parties started business together in summer 2018, when Mulsanne policies were first sold by Marshmallow (as intermediary with authority to enter into policies). The ratings engine they used was based on the engine prepared for Hiscox (“the Hiscox engine” or “the Hiscox tables”), but with some modifications, some of which were contributed in whole or in part by Mulsanne. The parties continued to develop and refine the ratings engine over time.
The relationship between the parties was governed by a written Terms of Business Agreement signed on 26th April 2018 but with an effective operating date of 11th May 2018 (“TOBA”).
During 2019 Dr Holliday and others in Marshmallow decided that they would like to form their own insurance company to sell motor policies, and they set about forming one. This was not disclosed to Mulsanne at that time or for some considerable period thereafter. It was not envisaged that that the new insurance company would simply replace Mulsanne, but it does not seem that clear views had been formed as to how they would co-exist commercially.
Marshmallow was getting ready to launch in autumn 2020, and in September a meeting took place at which Mulsanne was informed of its intentions. Mulsanne's initial reaction was not hostile, but very soon its attitude changed and Mulsanne expressed its hostility to the idea. Mulsanne decided that it wished to terminate the TOBA and sought to do so in February 2021. A dispute developed between Marshmallow and Mulsanne as to whether and when the TOBA was terminated, and its consequences, and in due course a further dispute developed about the alleged misuse of confidential information by Marshmallow in starting up, and trading with, Marshmallow Insurance. The confidential information averred by Mulsanne is said to be material information provided by Mulsanne from time to time for feeding into the ratings engine used for the purposes of entering into Mulsanne policies, or underwriting rules. In relation to some of that information it is said that it was actually used directly (i.e. in Marshmallow Insurance's own engine); in relation to other parts it is no longer said it is being...
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