PM Law Ltd v Motorplus Ltd and Others
| Jurisdiction | England & Wales |
| Judge | The Honourable Mr Justice Picken |
| Judgment Date | 05 February 2016 |
| Neutral Citation | [2016] EWHC 193 (QB) |
| Court | Queen's Bench Division |
| Docket Number | Case No: HQ14X01280 |
| Date | 05 February 2016 |
[2016] EWHC 193 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr Justice Picken
Case No: HQ14X01280
(formerly CL/2015/000497)
Richard Mawrey QC and Nazeer Chowdhury (instructed by PM Law Limited) for the Claimant
Jonathan Hough QC (instructed by Eversheds LLP) for the First Defendant
Daniel Rogers (instructed by the Third Defendant's in-house solicitor) for the Third Defendant
Josephine Higgs (instructed by the Fourth Defendant's in-house solicitor) for the Fourth Defendant
Hearing dates: 19 January 2016 and 5 February 2016
Introduction
This is an application by the First Defendant ('Motorplus') for an order striking out certain paragraphs in the Particulars of Claim (paragraphs 36 to 48) served in these proceedings by the Claimant firm of solicitors ('PM Law'), alternatively for an order striking out the claims made in those paragraphs as against Motorplus. This application is made under CPR 3.4(2)(a) and/or 3.4(2)(c). Motorplus also seeks summary judgment in respect of the claims set out in paragraphs 36 to 48, an application which is made under CPR 24.2.
The application is made in the context of proceedings brought by PM Law against not only Motorplus but also against the Third Defendant ('Alpha') and the Fourth Defendant ('Ageas'), which are both insurance companies. Although Alpha and Ageas did not themselves make equivalent applications, it was explained in a skeleton argument submitted by Miss Josephine Higgs, counsel for Ageas, that Ageas supported Motorplus's application. The same point was made by Alpha's counsel, Mr Daniel Rogers, who attended the hearing essentially as an observer but who made it clear towards the end of the hearing that Alpha's position was in line with that adopted by Ageas. I should explain that the Second Defendant ('Equity Red Star') obtained an order on 8 December 2015 dismissing PML Law's claim against it, HHJ Waksman QC deciding that various extensions of time obtained by PM Law as regards service of the Claim Form on Equity Red Star should be set aside. Equity Red Star is, accordingly, no longer part of the action.
The substantive submissions were, in these circumstances, advanced by Mr Jonathan Hough QC on behalf of Motorplus and by Mr Richard Mawrey QC, leading Mr Nazeer Chowdhury, on behalf of PM Law. Before addressing those submissions, which went somewhat beyond the strict boundaries of the application (and paragraphs 36 to 48 of the Particulars of Claim) so as to cover an unpleaded restitution case, it is first necessary that I set out some background.
Factual background
The background is not controversial. The controversy in this case lies, rather, in how the claims which have been advanced by PM Law have been put. In the circumstances, I can take much of what follows from the helpful summary set out in Mr Hough QC's skeleton argument, a summary which itself is based on what is stated in a witness statement made by Ms Erica Gaddum, the partner at Eversheds LLP with conduct of this case on Motorplus's behalf, on 12 November 2015. I shall, however, supplement Mr Hough QC's summary, in particular with citation of certain contractual and other terms.
Motorplus is an insurance intermediary which markets and administers legal expenses insurance policies of both Before the Event ('BTE') and After the Event ('ATE') types. Motorplus does this as agent for various insurers. At the time that the referral arrangements with PM Law to which I refer in a moment were in place, the BTE and ATE policies provided by Motorplus were underwritten by three insurers: the BTE policies were underwritten by Equity Red Star until late 2008 or early 2009, when Ageas (previously known as Groupama Insurance Company Ltd) took over those policies, whereas the ATE policies were underwritten by Equity Red Star until early 2009, when Alpha took over those policies.
A typical BTE policy is one which covers the insured person against what might be labelled 'own side' and adverse (or opponent's) costs of litigation in the event that an event occurs in the future and the insured person seeks to recover loss which is not insured under any other policy. An ATE policy is one which is issued after the event, typically in circumstances where the insureds enter into a conditional fee agreement (or 'CFA') with solicitors. The ATE policy will cover the risk of failing in the litigation and being liable for adverse costs and, in some cases, disbursements.
Relevant BTE policy provisions include, taking an Ageas policy by way of illustration, a scope of cover provision as follows:
"Subject to the terms, conditions, exclusions and limitations in this Policy, We will pay Legal Costs to a maximum of £50,000.00 in order to pursue a claim directly arising from one or more Insured Incidents, occurring within the Territorial Limits and during the Cover Period and provided that the premium has been paid, if We deem that there are reasonable prospects of success.
…
If an Appointed Lawyer is used, We will pay the Legal Costs for this."
"Appointed Lawyer" is defined as:
"The solicitor, solicitors' firm, barrister or other suitably qualified person appointed by us to act for you."
"Legal Costs" is defined in this way:
"Professional fees which You are bound to pay, including reasonable fees or expenses incurred by the Appointed Lawyer whilst acting for You in the pursuit of a claim."
As for the ATE policies, again by way of example, an Alpha policy includes the following terms:
"2 Insured section – Legal Expenses
Under this Section of Cover, the Underwriter shall provide an indemnity to the insured in respect of Opponents' Legal Costs and Own Disbursements."
"Disbursements" is defined as meaning:
"expenses paid by the appointed representative to the third parties that have been reasonably incurred on behalf of the insured in connection with the legal action … which are not the subject of any agreement where expenses are paid depending on the outcome of the legal action …".
"Appointed representative" is defined as meaning:
"a firm of solicitors accepted by the Insurers which has been accepted by the insured to act for the insured in accordance with the terms of this policy".
"Opponents costs" is defined as meaning:
"all costs, expenses and disbursements that have been reasonably incurred by the opponent in the legal action …".
Between August 2006 and early 2011, Motorplus had arrangements with PM Law to refer people with potential civil claims to PM Law, including people who had BTE insurance and people who were not known to have such insurance. These arrangements provided for PM Law to make a referral payment for each person who was referred to the firm and whose case was accepted. This referral scheme was at first arranged by an exchange of emails. However, they were subsequently formalised with the parties' entry into an agreement executed in June 2007 (the 'Referral Agreement'). That agreement provides at Clause 1 as follows:
"In consideration of the payment of referral fees by PM Law Ltd Solicitors as set out in clause 4 of this Agreement Motorplus Ltd shall refer a quantity of road traffic accident, accident at work, public or private liability and product liability PI and Non PI claims for compensation (the 'Referred Claims') to PM Law Ltd Solicitors which PM Law Ltd Solicitors will handle on behalf of Motorplus injured customers ('the Referred Customers') in accordance with the terms of this Agreement and the terms of contracts to be entered into between the Referred Customers and PM Law Ltd Solicitors."
Clause 7.2 is also of some relevance. This provides:
"Any agreement between Motorplus Ltd and a Referred Customer will provide that:
7.2.1 the independence of PM Law Ltd Solicitors professional advice will not be impaired by this Agreement.
7.2.2 the fact that the control of the Referred Customer PI claim will remain with PM Law Ltd Solicitors subject to the Referred Customers instruction."
In making a referral, Motorplus would give PM Law details of the potential litigant. PM Law would then contact the person and confirm whether he or she had any BTE insurance (including any not known to Motorplus). If not, then PM Law would enter into a CFA with the person and issue an ATE policy. Referral payments for accepted cases would be invoiced on a monthly basis.
Taking one of the CFA wordings as an example, this contains the following wording:
"Paying us
If you win your claim, you pay our basic charges, our disbursements and a success fee. You are entitled to seek recovery from your opponent of part or all of our basic charges, our disbursements, a success fee and insurance premium as set out in the document 'What you need to know about a CFA'.
…
If you lose you remain liable for the other sides [sic] costs and our disbursements. (You may be able to take out insurance to cover you for these risks)".
What appears to be the accompanying "Client Care Pack Conditional Fee Agreement" document (a document referred to in paragraph 36(1) of the Particulars of Claim where it is described as being used for BTE and ATE policies), includes wording as follows:
"Our Legal Fees – What you might have to pay
You have instructed us to pursue this matter under a Conditional Fee Agreement referred to as a CFA. This means that we will only charge...
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