Palmer v Palmer
| Jurisdiction | England & Wales |
| Judge | Lord Justice Dyson,Lord Justice Rimer,Lord Justice Sedley,Lord Justice Pill |
| Judgment Date | 06 February 2008 |
| Neutral Citation | [2008] EWCA Civ 46,[2007] EWCA Civ 548 |
| Docket Number | Case No: A2/2007/0408,Case No: 2007/0408 |
| Date | 06 February 2008 |
| Court | Court of Appeal (Civil Division) |
[2007] EWCA Civ 548
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM BIRMINGHAM DISTRICT REGISTRY
(HIS HONOUR JUDGE McKENNA)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Dyson
Case No: A2/2007/0408
MR C CORY-WRIGHT QC (instructed by Messrs Berryman Lace Mawer) appeared on behalf of the Appellant.
THE RESPONDENT DID NOT APPEAR AND WAS NOT REPRESENTED.
The authority in which the question raised in this case has been considered most comprehensively is Cormack v Washbourne [2000] CLC 1039. The judge quoted parts of the judgment of the court given by Auld LJ at paragraphs 15 and 16 of his judgment. It seems to me that there are two stages to the exercise that has to be performed before an order for costs can be made against the insurer of an unsuccessful insured in litigation. The first is to make findings of primary fact as to the parts played respectively by insurer and insured in the litigation, with a view to reaching a conclusion as to the motivation of the insurer. The second is, in the light of those findings, to decide whether, to use Auld LJ's language, the insurer acted exclusively in its own interest or whether the conduct of the insurer was sufficiently self-motivated to the exclusion of the interests of the insured for it to be just to order the insurer to pay the costs of the litigation. If the judge errs in making primary findings of fact and those errors are material to the judgment that the court has to make at the second stage, then this court will interfere. In this case, it seems to me that it is arguable that the judge did make findings of fact which were wrong.
In paragraph 38, the judge says that the financial position of PZ had been dire, to RSA's knowledge, since 2003, that knowledge having been acquired in August 2003. The statement of Mr Oxley of PZ was, I am told, read before the judge on the basis that it was not challenged. He sets out a history in considerable detail. It is true that he says that, at various times, he considered closing the company down, but there is an important paragraph 45 where he says that in early August 2005 he decided to make a small investment on behalf of the company, having established from the solicitors that they were confident of the outcome of the current litigation. The judge makes no reference to that and it seems to me that arguably, at least, that was an important matter that he should have taken into account.
Secondly, the judge correctly found at paragraph 40 that Mr Oxley was involved in the decision-making process throughout the litigation and approved of the action taken on his company's behalf throughout. This is described in considerable detail by Mr Oxley. He was plainly active in the litigation and appears to have been anxious that his company's defence should succeed.
In the light of that, it seems to me difficult to see how the judge could find at paragraph 42 that the rejection of the offer of £500,000 was one which on the facts “could only benefit RSA”. It is also difficult, as it seems to me, to see how, in the light of paragraph 45 of Mr Oxley's statement, that the judge could say that the only real interest being protected in the litigation was that of RSA (see paragraph 43).
I note also that Mr Spence, at paragraph 25 of his statement, which I understand stood as his evidence-in-chief when he gave evidence before the judge, says that Mr Oxley “felt strongly that liability should continue to be defended”. Mr Cory-Wright further submits that the statement made by the judge, that the financial position of the PZ was dire to the knowledge of the insurers, could only have been based upon paragraph 30 of Mr Oxley's statement because Mr Spence had no recollection of being aware of the financial state of the insured. Mr Cory-Wright submits that paragraph 30 is an insufficient foundation upon which to base a conclusion that, to the knowledge of the insurer, the financial state of the insured was so parlous that the insurer must have appreciated that it was only conducting the defence for its own benefit. It seems to me that there is force in that submission, too.
For these reasons, it seems to me that this is an appeal which has real prospects of success and I give permission accordingly.
Order: Application granted.
[2008] EWCA Civ 46
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
(His Honour Judge McKenna)
Royal Courts of Justice
Strand, London, WC2A 2LL
Lord Justice Pill
Lord Justice Sedley and
Lord Justice Rimer
Case No: 2007/0408
Mr Charles Cory-Wright QC (instructed by Berrymans Lace Mawer) for the Fourth Defendant/Appellant, Royal and Sun Alliance Insurance Plc
Mr John Norman (instructed by Barlow Lyde & Gilbert) for the First and Second Defendants/Respondents, The Estate of Kevin Palmer deceased and the Motor Insurers' Bureau
Introduction
This is an appeal by Royal & Sun Alliance Insurance PLC (“RSA”) against an order made on 2 February 2007 by His Honour Judge McKenna sitting as a judge of the Queen's Bench Division. The judge thereby exercised his jurisdiction under section 51 of the Supreme Court Act 1981 to order RSA personally to pay the costs that on 3 May 2006 he had earlier ordered the third defendant, PZ Products Limited (“PZP”), to pay to (i) the claimant (Kylie Palmer), (ii) the first defendant (the estate of Kevin Palmer deceased) and (iii) the second defendant (the Motor Insurers' Bureau), those costs being incurred in a claim and Part 20 claims against PZP. The judge's order was limited to the costs incurred by the receiving parties after 1 September 2003.
RSA was not an original party to the proceedings. Its interest in them was that PZP was its insured and it had financed PZP's unsuccessful defence of the claims. The judge's order followed an application that RSA should pay those costs, RSA being added as the fourth defendant for the purposes of that application. The judge's assessment was that RSA had financed the defence of the claims against PZP in its own exclusive interest so that it would be just to make the order sought. On this appeal, brought with the permission of Dyson LJ, RSA asserts that, contrary to the judge's findings, it was defending the case in the mutual interests of both itself and PZP and that there was nothing exceptional about the case to justify the exercise by the judge of the exceptional jurisdiction under section 51.
The facts
The tragic background facts can be stated shortly. On 6 January 1996 the claimant, Kylie Palmer, then aged six, was travelling in the front passenger seat of a Nissan Micra driven by her father, Kevin, an unmedicated epileptic. He died at the wheel, the car crashed and Kylie suffered devastating injuries. She sued her father's estate (“the estate”) for damages for negligence, but his motor insurers successfully avoided liability under his policy on the grounds that the policyholder, his wife, had failed to disclose her own medical condition of epilepsy to them.
This led to the joining of the Motor Insurers' Bureau (“the MIB”) as second defendant to Kylie's claim under the Uninsured Drivers' Agreement (“the UDA”). The MIB raised no issue that the estate was liable to Kylie. But, as was its right under the UDA, it required Kylie (upon indemnifying her against costs) also to sue PZP, against which the MIB also wished to bring Part 20 proceedings. PZP was the manufacturer of a “Klunk-Klip” device that had been fitted to Kylie's seat belt and was designed to prevent inappropriate tightening of the belt by the operation of the inertia reel. The MIB's allegations were that PZP had been in breach of statutory duty and negligent on the basis that (a) the device's design was unsafe, (b) it had been in use by Kylie at the time of the accident, (c) but for its use and the design defects, Kylie would not have suffered her injuries, and so (d) PZP was liable to her for those injuries. Kylie joined PZP as the third defendant and Part 20 proceedings were brought against it by both the estate and the MIB.
The inclusion of PZP in the proceedings was of potential importance to the MIB. If PZP were liable to Kylie, its liability share under any normal apportionment of damage as between it and the estate might well be modest. As, however, the MIB is only an “insurer of last resort”, if PZP were liable to Kylie, it would have to pay the judgment against it first and in full; and the MIB would be liable to pay out under the UDA only to the extent that that judgment remained unsatisfied, that is to the extent that PZP was unable to fund its payment, whether by insurance or otherwise.
Kylie's claim proceeded to trial on liability alone on 30 January 200As the estate had admitted liability, the only issue was whether PZP was also liable. This raised two questions: (i) was the Klunk-Klip device unsafe; and (ii) did it cause Kylie's injuries? Judge McKenna's answers to both questions were that the device was unsafe and had substantially contributed to Kylie's injuries sustained in the accident. Her claim is now proceeding to...
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