R+v Versicherung AG v Risk Insurance and Reinsurance Solutions SA and Others
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Gloster, Dbe,MR. JUSTICE TOMLINSON,Mr. Justice Tomlinson,MRS JUSTICE GLOSTER, DBE,Mrs Justice Gloster, DBE |
| Judgment Date | 29 January 2007 |
| Neutral Citation | [2006] EWHC 1705 (Comm),[2007] EWHC 79 (Comm),[2006] EWHC 42 (Comm) |
| Docket Number | Case No: 2003 Folio 413,Case No: 2003413 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 29 January 2007 |
[2006] EWHC 1705 (Comm)
IN THE HIGH COURT OF JUSTICE
COMMERCIAL COURT
QUEEN'S BENCH DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
MR. JUSTICE TOMLINSON
Case No: 2003413
Colin Edelman QC & Charles Dougherty (instructed by Messrs LeBoeuf, Lamb, Greene and MacRae) for the Claimant
Hugo Page QC (instructed by Messrs Penningtons) for the Defendants
Hearing dates: 21, 22, 23, 27, 28, 29 and 30 March 2006
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.
On 18 November 2004 Moore-Bick J gave his judgment on liability in this case in favour of the Claimant, and on 27 January 2006 Gloster J gave her judgment on certain issues of principle in relation to the quantum of the Claimant's claim. In the interest of economy and proportionality I do not propose to set out the factual background, which can be found fully set out in the first judgment and summarised in the second. The hearing before me has been concerned with a number of disparate issues and applications on some of which I ruled and gave my reasons during the course of the hearing which occupied seven days between 21 and 30 March 2006. On one issue I announced my decision reserving until now my reasons therefor. In this judgment I shall refer to the Claimant as "R+V" and to the first four corporate Defendants collectively as "Risk."
The claim for managerial, staff and external contractors' time
Gloster J held that R+V is entitled to recover as damages for conspiracy the expense of managerial and staff time spent in investigating and mitigating the conspiracy and in handling the run-off of claims after termination of the binders. It was left to be decided by, in the event, me, what amount is recoverable by R+V under this head. Gloster J held that in this exercise damages are at large and the court is not over-concerned to require a claimant to prove precise quantification of its losses. Such losses are recoverable notwithstanding that no loss by way of additional expenditure or loss of revenue or profit can be shown. This is however, held Gloster J, subject to the proviso that it has to be demonstrated with sufficient certainty that the wasted time was indeed spent on investigating and/or mitigating the relevant tort, i.e. that the expenditure was directly attributable to the tort. This Gloster J regarded as another way of putting what Potter LJ said in Standard Chartered Bank v Pakistan Shipping 2001 EWCA Civ 55, namely that to be able to recover the claimant has to show some significant disruption to the business, in other words, that staff have been significantly diverted from their usual activities.
These points having already been decided, it being left to me only to decide whether the claimant has proved its claim with sufficient particularity, I am not sure that it is open to me to revisit the question of the proper approach in law, even if I wished to do so. However I respectfully agree with Gloster J's analysis of what is demonstrated by the authorities to be the correct approach, which seems to me entirely in line with how the matter is put in the leading textbook, McGregor on Damages, 17 th edition, at paragraph 40.008 and in Lonhro Plc v Fayed (No. 5) [1993] 1WLR1489 at 1494 per Dillon LJ. I note also the rationale for this approach as enunciated by Bowen LJ in Ratcliffe v Evans (1892) 2QB 524 at 532–3, in giving the judgment of the Court:
"In all actions accordingly on the case where the damage actually done is the gist of the action, the character of the acts themselves which produce the damage, and the circumstances under which these acts are done, must regulate the degree of certainty and particularity with which the damage done ought to be stated and proved. As much certainty and particularity must be insisted on, both in pleading and proof of damage, as is reasonable, having regard to the circumstances and to the nature of the acts themselves, by which the damage is done. To insist upon less would be to relax old and intelligible principles. To insist upon more would be the vainest pedantry."
It was common ground before Gloster J that R+V is entitled in principle, subject to quantification, to recover as damages for conspiracy external costs and expenses incurred as a result of the conspiracy. Gloster J recorded the precise terms of Risk's concession at paragraph 54 of her judgment as follows:
"it is agreed that subject to issues of causation, remoteness and reasonableness of the expenditure and issues arising out of its being made in connection with the litigation, there is no reason in principle why R+V cannot recover as part of its loss arising out of the conspiracy losses which consist in the cost of hiring external consultants or experts."
It seems to me that the quantification of R+V's properly recoverable external contractors' costs must be subject to the same general principles as are applicable to the quantification of recoverable staff and management costs.
Under each head mentioned above R+V has sought to exclude from its claim costs attributable to work in connection with the London litigation, by which is meant work by way of preparation for and support of that litigation. There is an issue to what extent they have been successful in that endeavour.
In circumstances where it is not confident of its ability ultimately to recover amounts found due to it, R+V has naturally attempted to discharge the evidential burden that lies upon it without disproportionate expense and without therefore descending to a high degree of particularity. In any event, since R+V does not operate a system for recording the time spent by its employees on particular tasks or issues, its staff have been asked to estimate the amount of their time that has been spent in investigating the conspiracy and in mitigating its effects, including time spent in running off the business and handling claims, tasks which would otherwise have been performed by Risk.
The sums which are in consequence claimed are: -
i) The direct cost of R+V personnel time between 2002 and 2005 —€1,482,476.
ii) Internal overhead costs associated with this personnel time —€831,747.
iii) The relevant proportion of the fees charged by an external contractor, the consultants Chiltington International GMBH —€1,214,133.
The total claimed under this head is therefore €3,528,357.
In order to support this claim R+V relied upon a considerable body of evidence. Dr. Matthias Maneth-Desrochers is a department and project manager at R+V. Since January 2005 he has had the title of "project director" within the Risk run-off team. He has been responsible for co-ordinating the collection of data to support the claim and he was called to give evidence. Significantly, he spoke of how certain employees, Martina Schwarzel, Sabine Giegerich and Michael Eschke had been essentially released from their normal work in order to work on Risk matters and had formed the core of the "Risk team." The regular work of these employees was delegated to other employees, who completed the work on overtime. So far as concerned all of the work, not just that performed by these three employees, he described it as complex and time-consuming. He stressed that it had required the investment of a great deal of resources by R+V and had caused disruption to the normal functioning of the Reinsurance Department. This evidence was not challenged. Mr. Page took a different point, which is that because R+V had expressly not put forward a case to the effect that there was any disruption to or diminution in third party premium written, so therefore it was precluded from asserting that the necessity to deal with the conspiracy had caused the disruption to business which Gloster J had held was an essential prerequisite to recovery. This seems to me with respect misconceived. Gloster J held that it is unnecessary in order to establish a claim for the relevant costs to show any loss of business or loss of profit. Just because underwriting was not disrupted to the extent of business being lost does not mean that there was not significant disruption to the business in the sense of staff being significantly diverted from their usual activities. The evidence of Mr. Maneth made good this proposition and, as I have already recorded, I did not understand it to be challenged. Dr. Maneth explained how the supporting schedules setting out the time claimed had been collated and prepared and how the overhead costs had been calculated.
In addition to the overarching evidence of Dr. Maneth R+V relied also upon evidence from Ms Karin Kleister, the departmental manager for payroll accounting. She had calculated the gross wage costs of each employee. Ms. Kleister was tendered for cross-examination but Risk did not require her attendance.
Further, R+V tendered in evidence twenty-two short statements from R+V's staff confirming the time spent on Risk matters, confirming that that time did not include work which was directly related to the conduct of the London litigation and confirming the accuracy of the description of the work as set out in a schedule with which I was supplied, Schedule 2c, which later became Schedule 3d. R+V called one witness from each of the relevant departments to speak to his or her "proforma" statement in this regard. From the Technical Accounting Department Mr. Michael Eschke was called, one of the core members of the Risk team as I have already...
To continue reading
Request your trial
-
Cheltenham Borough Council v Christine Susan Laird
...Water Utilities Ltd [2007] Bus LR 726, CA, per Wilson LJ at paras 73–87; R+V Versicherung AG v Risk Insurance Solutions SA (No3) [2006] EWHC 42 (Comm), per Gloster J at paras 54–78; R+V Versicherung AG v Risk Insurance Solutions SA (No.4) [2006] EWHC 1705 (Comm), per Tomlinson J at paras 8–......
-
First Subsea Ltd v Balltec Ltd and Others
...Motor Trade Association v Salvadori [1949] 1 Ch 556 at 569. This was disputed by Mr Cavender QC who noted that in R+V Versicherung AG [2006] EWHC 42 (Comm) what was common ground (recorded at paragraph [54]) was that there was "no reason in principle why [the claimant] cannot recover as par......
-
Nationwide Building Society v Dunlop Haywards Ltd
...spent on that activity. It is not necessary to show some additional expenditure or loss of revenue or profit: R+V Versicherung AG v Risk Insurance and Reinsurance Solutions SA [2006] EWHC 42 (Comm) at para 77. 16 CBS was tipped off about the possibility of fraud in January 2006. In mid Febr......
-
Novoship (UK) Ltd and Others v Vladimir Mikhaylyuk and Others
...of the merits and dealing with the ACM Shipping claim is a quite separate head of loss. In R & V Verisischerung AG v Risk Insurance [2006] EWHC 1705 Tomlinson J, as he then was, held that it was not open to the defendants to set off against a claim for management time and other costs of inv......
-
Recovering Damages For Diversion Of Employees - Australia Takes Note Of English Decisions
...diverted" from their usual activities. This test was used in R+V Versicherung AG v Risk Insurance and Reinsurance Solutions SA [2006] EWHC 42, Bridge UK.COM Limited v Abbey Pynford plc [2007] EWHC 728 and Verizon UK Ltd (formerly MCI WorldCom Ltd) v Swiftnet Ltd [2008] EWHC Despite what is ......
-
Tort Law
...Ch 556; Lonrho plc v Fayed (No 5)[1993] 1 WLR 1489; and R+V Versicherung AG v Risk Insurance and Reinsurance Solutions SA[2006] EWHC 42 (Comm)). The plaintiff had to serve interrogatories on the nurse and it was in the interrogatories that she admitted that she had altered the consent form ......
-
Tort Law
...163. 52 British Motor Trade Association v Salvadori [1949] Ch 556; R+V Versicherung AG v Risk Insurance and Reinsurance Solutions SA [2006] EWHC 42 (Comm). 53 [2019] EWHC 1557. 54 Singapore Shooting Association v Singapore Rifle Association [2020] 1 SLR 395 at [97]. 55 Singapore Shooting As......