Persimmon Homes Ltd and Another v First Assist Insurance Service Ltd

JurisdictionEngland & Wales
CourtQueen's Bench Division (Commercial Court)
JudgeMR JUSTICE DAVID STEEL
Judgment Date12 July 2010
Neutral Citation[2010] EWHC 1705 (Comm)
Date12 July 2010
Docket NumberCase No: 2009 FOLIO 668

[2010] EWHC 1705 (Comm)

IN THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION

COMMERCIAL COURT

Before: Mr Justice David Steel

Case No: 2009 FOLIO 668

Between
(1) Persimmon Homes Ltd
(2) Persimmon (City Developments) Ltd
Claimants
and
Great Lakes Reinsurance (UK) Plc
Defendant

MR DAVID CAVENDER QC (instructed by NABARRO LLP) for the CLAIMANTS

MISS SUE CARR QC & MR JONATHAN HOUGH (instructed by DAVENPORT LYONS SOLICITORS) for the DEFENDANT

Hearing dates: 10, 11, 12, 13 May 2010

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 DAVID STEEL MR JUSTICE DAVID STEEL

MR JUSTICE DAVID STEEL :

1

This action relates to an After-the-Event (“ATE”) insurance policy which the defendant underwriters have purported to avoid for material misrepresentation and non-disclosure. It has already gained a degree of notoriety as evidencing one of the potential difficulties with ATE insurance where an insured has been ordered to pay the costs of a successful defendant and in that context it is referred to at p.86 of the Review of Civil Litigation Costs by Lord Justice Jackson December 2009.

2

The present action is brought by the successful defendant in the underlying proceedings (“Persimmon”) under section 1 of the Third Parties (Rights Against Insurers) Act 1930, the original claimant (“CPH”) having been wound up by an order of the Court dated 29 October 2008. It follows that Persimmon effectively stands in the shoes of its former opponent and thus, as appears below, is in the unusual position of seeking to adopt the rights of someone whose dishonest evidence it has established.

3

The proceedings between CPH and Persimmon involved a dispute about a property transaction relating to a substantial site in Birmingham. In short, the position can be summarised as follows:

i) CPH had the opportunity to purchase and exploit a development site owned by National Carparks Limited (“NCP”) at Navigation Road, Birmingham (“the Site”) and had done some preliminary work needed to obtain planning permission and had incurred professional fees for this purpose.

ii) CPH did not have funds to develop the Site or even pay the existing professional fees it had incurred, and during the course of 1999 NCP increasingly lost patience with CPH and its attempts to purchase the Site, and indicated that it was going to look for an alternative buyer.

iii) In those circumstances Persimmon (who had already expressed an interest in getting involved in the residential elements of the Site) had discussions with CPH in early August 1999, with a view to acceding to CPH's negotiating position with NCP for the purchase of the Site.

iv) What was agreed during these oral discussions was the first significant area of dispute. The respective positions were as follows:

a) CPH's case was that there was an “understanding” but not an agreement that Persimmon would accede to its negotiating position and buy the Site and that this was agreed during a series of telephone conversations between Bernard Tracey for CPH and Steve Watt for Persimmon. Its case was that it was agreed that Persimmon would pay their professional fees come what may but would also pay an introduction fee of 2%.

b) Persimmon's case was that there was a binding agreement reached at this time at a face to face meeting between Steve Watt and Paul Tracey (son of Bernard Tracey) that in exchange for taking over CPH's negotiating position with NCP, Persimmon would upon exchange of contracts for the Site, discharge the Insured's existing professional fees.

v) Persimmon went on to exchange contracts on the Site on 11th November 1999 and there was then another meeting between CPH (Paul Tracey) and Mr.Watt on 1 st December 1999. This was the second disputed meeting. The respective positions were as follows:

a) CPH's case was that at this meeting (but not previously) an agreement was reached as to the terms upon which Persimmon had been allowed to take over its negotiating position as set out in a manuscript note prepared during the meeting by Paul Tracey and a letter to Persimmon dated 16th December 1999.

b) Persimmon's case was that at this meeting the earlier agreement relating to professional fees was reiterated and that most of the matters referred to in the manuscript note and letter of 16th December 1999 were discussed, but no agreement was reached on any of them.

Application for funding the claim

4

In November 2003, CPH sought junior Counsel's advice on the prospects of success in a claim against Persimmon. In his written advice, Counsel expressed the opinion that the chances of success on establishing the December contract were 60%. In the alternative, the prospects of success on a quantum merit claim, to which he could not presently see any defence, were 70%.

5

In expressing his view, Counsel drew attention to the fact that the determination of the issues depended very heavily on the oral evidence of Mr. Paul Tracey. He also recognised that some of the contemporary documents were not easy to reconcile with his account. But nonetheless he expressed the view that, although not having met him, “his account of the meeting [in December] is likely to be believed”. Nonetheless, he was not willing to act on a conditional fee basis both because of the heavy reliance on oral evidence and the absence of any clear information of the basis of the defence.

6

On 23 January 2004, Messrs. Edwin Coe, who had been retained as solicitors for CPR, wrote a letter before action. This contended that the terms of the agreement between Paul Tracey and Mr. Watt for Persimmon were set out in a letter from Paul Tracey to Mr. Watt dated 16 December 1999. This, it was claimed, summarised the topics agreed at a meeting on 14 December 1999. Attached to the letter before action were the manuscript notes “of the meeting” said to have been made by Paul Tracey. As regards quantum, the claim was put forward in the region of £450,000 on either basis.

7

In response, Persimmon, in a letter written by Mr. Francis its group legal director, contended that no contractual arrangements had been entered into in December although Mr. Tracey had put forward various proposals for an introduction fee. It was contended that this had been made clear as Persimmon's position in Mr. Watt's letter of 20 December 1999 in response to CPH's letter of 16 December in which he said:

“I regret that I am unable to agree all of the contents as I am still endeavouring to reach agreement with some of the parties to the relevant jigs1 involved.”

8

The next stage was that on 4 May 2004 Messrs. Edwin Coe entered into a Conditional Fee Agreement with CPH. The success fee was set at 68% (8% relating to the cost of the postponement of payment of costs and disbursements). The rationale for this figure was said to be set out in a schedule. In particular, reference was made to the firm's assessment of the “risks” of the claim including the fact that “the claim depends quite heavily on oral evidence, the prospect of security for costs and the events are several years ago”.

9

There followed the initial application to underwriters for ATE Insurance Cover dated 2 June 2004. That application incorporated a number of documents. First there was a proposal form signed by Paul Tracey and by Joanna Osborne, a partner of Edwin Coe. This recorded that a “successful outcome” was anticipated in the form of an award of £650,000 damages with an estimate of achieving this as between 51% and 60%. The likely costs of Persimmon up to trial were estimated at £90,000. The proposal form expressly referred to the requirement to disclose all material facts.

10

There was also a “chronology of facts” in which two dates were highlighted:

“12.08.99 BT [Bernard Tracey] agrees with SW [Stephen Watt] that Persimmon would take over as purchaser and an outline remuneration package agreed.

1.12.99 Meeting CPH and Persimmon when detailed terms of remuneration package agreed.”

11

A “summary of evidence in support” was included which made specific reference to the manuscript note made by Paul Tracey at the December meeting although in this regard, Messrs. Nabarro Nathanson, who had been retained by Persimmon, in their own response to the letter of claim had said this:

“2.2 Mr Watt has confirmed that as far as he can recall Mr Tracey did not appear to be taking any detailed notes at the meeting. We note from paragraph 14 of your letter dated 23 January 2004 that you do not state when your client is alleged to have made the notes (i.e. during or after the meeting).

2.3

There is no dispute that the matters set out in your client's letter to Persimmon dated 16 December 1999 were discussed at the meeting. It is however denied that these matters were agreed with your client.”

Also attached were Counsel's advice and a clip of some of the contemporary correspondence. At this stage Edwin Coe had yet to prepare witness statements.

12

The placing file was put before a Mr. Mike Fallon, a member of the defendant's underwriting team. His manuscript notes make it plain that he considered the material with some care. On 23 June 2004 Mr. Fallon spoke to Joanna Osborne. Her note records that Mr Fallon thought it “not a bad case”. Miss Osborne made the comment that her reading of the documents made it appear that Mr Watt “was prepared to lie on this one”. Her note went on:

“I said that in relation to the oral evidence, we also have a contemporaneous note which we took and which the other side did not have anything to contradict. I also said that the more and more that I spoke to witnesses they confirmed the client's viewpoint and my view on the case became stronger and stronger.”

13

Mr. Fallon's reaction was set out in his...

To continue reading

Request your trial
4 cases
  • Mr Nigel Rowe & Others v Ingenious Media Holdings Plc & Others
    • United Kingdom
    • Chancery Division
    • 10 February 2020
    ...ATE insurers do sometimes seek to avoid their policies [27] (referring to Persimmon Homes Ltd v Great Lakes Reinsurance (UK) plc [2010] EWHC 1705 (Comm)). It might be different if insurers could only avoid the policy for fraud, as it may not be a particularly difficult exercise for a judge......
  • Premier Motorauctions Ltd ((in Liquidation)) and Another (Respondents/Claimants) v Pricewaterhousecoopers LLP and Another
    • United Kingdom
    • Court of Appeal (Civil Division)
    • 23 November 2017
    ...do seek to avoid their policies if they consider it right to do so, see Persimmon Homes Ltd v Great Lakes Reinsurance (UK) Plc [2010] EWHC 1705 (Comm), [2011] Lloyd's Rep IR 101 in which a successful defendant was unable to recover its costs from ATE insurers. The landscape after trial may......
  • Adam Robert Giaquinto v ITI Capital Ltd (formerly “Walbrook Capital Markets Ltd” and “FXCM Securities Ltd”)
    • United Kingdom
    • Queen's Bench Division
    • 10 May 2022
    ...do seek to avoid their policies if they consider it right to do so: see Persimmon Homes Ltd v Great Lakes Reinsurance (UK) plc [2011] Lloyd's Rep IR 101 in which a successful defendant was unable to recover its costs from ATE insurers. The landscape after the trial may be very different fr......
  • URE Energy Ltd v Notting Hill Genesis
    • United Kingdom
    • Queen's Bench Division (Commercial Court)
    • 8 October 2021
    ...do seek to avoid their policies if they consider it right to do so: see Persimmon Homes Ltd v Great Lakes Reinsurance (UK) plc [2011] Lloyd's Rep IR 101 in which a successful defendant was unable to recover its costs from ATE insurers. The landscape after trial may be very different from t......
4 firm's commentaries
  • Insurance E-Brief - Summer 2013
    • United Kingdom
    • Mondaq United Kingdom
    • 5 August 2013
    ...QC that inducement had not been proved. By contrast, the decision in Persimmon Homes Ltd v Great Lakes Reinsurance (UK) [2011] Lloyd's Rep IR 101 illustrates that the absence of evidence from the actual underwriter is not necessarily fatal to his employer's prospects of success. The insurer......
  • The Inexorable Rise Of Inducement
    • United Kingdom
    • Mondaq United Kingdom
    • 30 July 2013
    ...QC that inducement had not been proved. By contrast, the decision in Persimmon Homes Ltd v Great Lakes Reinsurance (UK) [2011] Lloyd's Rep IR 101 illustrates that the absence of evidence from the actual underwriter is not necessarily fatal to his employer's prospects of success. The insurer......
  • Insurance: ATE Insurers Avoid For Non-Disclosure And/Or Misrepresentation
    • United Kingdom
    • Mondaq United Kingdom
    • 2 August 2010
    ...against insurers. Further reading: Persimmon Homes Ltd and Persimmon (City Developments) Ltd v Great Lakes Reinsurance (UK) PLC [2010] EWHC 1705 (Comm) This article was written for Law-Now, CMS Cameron McKenna's free online information service. To register for Law-Now, please go to Law-Now ......
  • Insurance and Reinsurance Review of 2010
    • United Kingdom
    • Mondaq United Kingdom
    • 20 December 2010
    ...time-consuming exercise for both the insured and its insurers Underwriting Persimmon Homes Ltd v Great Lakes Reinsurance (UK) Plc [2010] EWHC 1705 (Comm) Whether ATE insurers entitled to avoid policy/allegations of negligent An After the Event ("ATE") insurance policy was issued to the insu......
1 books & journal articles
  • Tort, Insurance and Ideology: Further Thoughts
    • United Kingdom
    • The Modern Law Review Nbr. 75-3, May 2012
    • 1 May 2012
    ...policy coverage from beingnegatived: MDIS vSwinbank [1999] Lloyd’s Rep IR 516; Persimmon Homes Ltd vGreat LakesReinsurance (UK) Plc [2010] EWHC 1705 (Comm); [2011] Lloyd’s Rep IR 101.8 There is much US authority for the proposition that a liability insurer who refuses to settle withthe thir......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT