R (Geologistics Ltd) v Financial Services Compensation Scheme
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE DAVIS |
| Judgment Date | 04 March 2003 |
| Neutral Citation | [2003] EWHC 629 (Admin) |
| Docket Number | CO/3943/2002 |
| Court | Queen's Bench Division (Administrative Court) |
| Date | 04 March 2003 |
[2003] EWHC 629 (Admin)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
THE ADMINISTRATIVE COURT
Royal Courts of Justice
Strand
London WC2
Mr Justice Davis
CO/3943/2002
MR C EDELMAN QC AND MR C WYNTER (instructed by Davies, Arnold, Cooper) appeared on behalf of the CLAIMANT
MR R PHILLIPS QC AND MR M FORDHAM (instructed by Herbert Smith) appeared on behalf of the DEFENDANT
Tuesday, 4th February 2003
Introduction
On 17th June 2001, the Independent Insurance Company Limited (which I will call "Independent") was placed into provisional liquidation, provisional liquidators being appointed on that date. The question now raised in the present claim comes to this: is the Financial Services Compensation Scheme (the successor to the Policyholders Protection Board) liable, on the true construction of section 6(5) of the Policyholders Protection Act 1975, to bear the costs of solicitors, retained by a limited liability company which had taken out the relevant insurance with Independent, incurred in the unsuccessful defence of a claim for damages for personal injuries brought by an employee of that insured company?
The background facts are these. The claimant is a company called Geologistics Limited, formerly LEP International Limited. Its business includes that of global integrated logistics and transportation management services. At all relevant times it was insured in respect of, amongst other things, employers' liability by Independent. On 4th January 1997, an employee of the claimant called Mr Froggatt, who was employed as a cargo handler at the claimant's premises in Manchester, suffered an injury whilst at work. A bar weighing over one ton fell on Mr Froggatt's foot, causing him injury. He commenced proceedings for damages in the Bolton County Court on 6th July 1998. The claim for damages included a claim for loss of earnings. The claimant notified its insurers, being Independent. At that time, Independent used an informal panel of three firms of solicitors for handling claims of such a kind, being Davies Arnold Cooper (which I will call "DAC"); Berrymans Lace Mawer; and Davies Lavery. In the event, DAC were retained by Independent on behalf of the claimant on around 21st July 1998.
The Policy in question taken out by the claimant with Independent was a composite policy. Thus it did not cover solely employers' liability but extended to various other areas of liability as well. The Policy, which I gather was Independent's standard form of policy in this context, is entitled on the cover sheet "Business Liability". It provided on page 3 that Independent would indemnify the insured within the terms, exceptions and conditions of the Policy against the events set out in the operative sections and occurring in connection with the business for the relevant period of insurance. There then followed several pages of general policy definitions, exceptions and conditions. General policy conditions 7 and 8 on page 7 of the Policy read as follows:
"7) Claims (Action by the Insured)
The insured or his legal personal representatives shall give notice in writing to the Company as soon as possible after any event which may give rise to liability under this Policy with full particulars of such event. Every claim notice letter or writ or process or other document served on the Insured shall be forwarded to the Company immediately on receipt. Notice in writing shall also be given immediately to the Company by the Insured of any impending prosecution inquest or fatal inquiry in connection with any such event.
8) Claims (Conduct and Control)
No admission offer promise payment or indemnity shall be made or given by or on behalf of the Insured without the written consent of the Company.
The Company shall be entitled if it so desires to take over and conduct in the name of the Insured the defence or settlement of any claim or to prosecute in the name of the Insured for its own benefit any claim for indemnity or damages or otherwise. The Company shall have full discretion in the conduct of any proceedings and in the settlement of any claim against the Insured and the Insured shall give all such information and assistance as the Company may require".
Section 1 of the Business Policy is entitled Employers' Liability. The cover is stated in these terms:
"In the event of Bodily Injury [which is the subject of a definition] caused to an Employee within the Territorial Limits arising out and in the course of employment by the Insured the Company would indemnify the Insured in respect of Compensation for such Bodily Injury arising out of such event".
Then, under the heading Section Exception, this is provided:
"The Company shall not provide indemnity against liability in respect of which compulsory insurance or security is required under the Road Traffic Act 1998 …", and I need not read the following words.
Then under the heading Section Extensions, this is provided:
"These Extensions are subject otherwise to the Terms Exceptions and Conditions of this Policy.
1) Work Overseas.
The indemnity provided by this Section shall extend to apply in respect of liability for Bodily Injury caused to an Employee whilst temporarily engaged in work outside the Territorial Limits".
Then there are certain provisos to that and certain other paragraphs in this section.
Section 2 is entitled Public Liability. The cover there provided is this:
"In the event of accidental
1) Bodily Injury to any person
2) Damage to Property
3) obstruction trespass nuisance or interference with any right of way air light or water or other easement
4) wrongful arrest wrongful detention false imprisonment or malicious prosecution
occurring within the Territorial Limits the Company will indemnify the Insured in respect of Compensation arising out of such event".
There are then set out various provisions relating to limit of liability and section exceptions. One of the section exceptions is in respect of bodily injury to any employee arising out of and in the course of employment by the insured in the business. That, of course, is the subject of cover in Section 1 of the Policy. Another section exception relates to matters caused by or arising from any product supplied. That is the subject of cover contained in Section 3 of the Policy.
Section 3 indeed is entitled Products Liability. The cover there provided is:
"In the event of accidental
1) Bodily Injury to any person
2) Damage to Property
caused anywhere in the world by any Product Supplied the Company will indemnify the Insured in respect of Compensation arising out of such event".
After those sections, there is then a series of "General Policy Extensions", so-called. Paragraphs 1 and 2 of the General Policy Extensions provide as follows:
"1) Claimants' Costs and Expenses
The Company will provide indemnity against legal liability for all costs and expenses recoverable by any claimant in connection with any claim to which the indemnity expressed in Sections 1, 2 or 3 applies.
2) Defence Costs and Expenses
The Company will provide indemnity in respect of all
a) costs incurred with the Company's written consent of legal representation at any
i) coronor's inquest or other inquiry in respect of any death
ii) proceedings in any court in respect of any act or omission causing or relating to any occurrence
b) other costs and expenses incurred with the Company's written consent in relation to any matter which may be the subject of indemnity under Sections 1, 2 or 3".
It is not necessary to recite any other of the General Policy Extensions.
The claim brought by Mr Froggatt was defended by the claimant, DAC acting on its behalf. As was contemplated by the General Policy Conditions and as is the invariable practice in such cases, the defence in substance was conducted by the solicitors in close liaison with Independent, albeit of course DAC was acting on behalf of the claimant. It is accepted, on the facts of this particular case and on the wording of this particular Business Policy, that the claimant had a liability to pay DAC's legal costs and that such liability fell within the ambit of this particular Policy.
In due course, liability to Mr Froggatt was admitted. Quantum, however, was not. There was a trial at the Manchester County Court and in the event judgment was given in favour of Mr Froggatt on 7th February 2001 for damages in the sum of £110,650.87, including interest, with costs. It would appear that that award was very much higher than had been anticipated. The claimant accordingly appealed. Independent quite soon thereafter was placed in provisional liquidation, as I have mentioned. The appeal thereafter was pursued with the consent of Independent, by its provisional liquidators. In the event, the appeal was dismissed with costs by judgment of the Court of Appeal given on 17th April 2002.
The costs of DAC in acting in the proceedings up until 17th June 2001 —that is, the date of the provisional liquidation —are put at £15,710.55. The costs of DAC in acting after that date amounted, so I was told, to £8,984.81. I was told that the provisional liquidators have discharged the latter costs. As to DAC's costs of the pre-liquidation period, the claimant itself has, I was told, discharged those costs.
The claimant considered that those costs for which it was liable fell within the ambit of the Policy. That, as I have said, is not disputed in this particular case. The claimant further considered that, Independent having been placed in insolvent liquidation, the...
To continue reading
Request your trial
-
R (Geologistics Ltd) v Financial Services Compensation Scheme
...refused. (Order does not form part of the approved judgment) Schedule 1 Extract from the judgment of Davies J in Financial Services Compensation Scheme v Geologistics given on 4 th March 2003. ….. The Policy in question taken out by the claimant with Independent was a composite policy. Thus......
- The King on the Application of Manchikalapati and Others v The Financial Services Compensation Scheme
-
Campbell v O Donnell and Others
...as guidance as to the ordinary meaning of the phrase. Again in R (Geologistics Limited) v Financial Services Compensation Scheme 2003 E.W.H.C. 629 (Admin) at 1709 Davis J. accepted the view of Mann C.J. as to what is ordinarily conveyed by the phrase and went on to say that it conveys "a de......