Temple Legal Protection Ltd v QBE Insurance (Europe) Ltd

JurisdictionEngland & Wales
JudgeBennett J,Moore-Bick L JJ,Rix
Judgment Date06 April 2009
Neutral Citation[2009] EWCA Civ 453
CourtCourt of Appeal (Civil Division)
Date06 April 2009
Docket NumberCase No: A3/2008/1094

[2009] EWCA Civ 453

[2008] EWHC 843 (Comm)

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

QUEEN'S BENCH DIVISION (COMMERCIAL COURT)

MR. JUSTICE BEATSON

Before: Lord Justice Rix

Lord Justice Moore-Bick

and

Mr. Justice Bennett

Case No: A3/2008/1094

Between
Temple Legal Protection Limited
Claimant/Appellant
and
QBE Insurance (Europe) Limited
Defendant/Respondent

Mr. Christopher Butcher Q.C., Mr. Timothy Saloman Q.C. and Mr. Jonathan Hough (instructed by Stevens & Bolton LLP) for the appellant

Mr. Andrew Popplewell Q.C. and Mr. Harry Matovu (instructed by Barlow, Lyde & Gilbert LLP) for the respondent

Hearing dates: 27 th, 28 th & 30 th January 2009

Lord Justice Moore-Bick

Lord Justice Moore-Bick:

Background

1

This is an appeal by Temple Legal Protection Ltd (“Temple”) against the order of Beatson J. made on 25 th April 2008 dismissing Temple's appeal against an award made by the arbitrator, Mr. J.H.L. Leckie, in proceedings against the respondent, QBE Insurance (Europe) Ltd (“QBE”).

2

Temple is an insurance broker specialising in legal expenses insurance, both “Before the Event” (“BTE”) and “After the Event” (“ATE”) insurance. The respondent is the European wing of a major international insurance group. The dispute between these two parties arises out of an Underwriting Agency Agreement, a type of agreement generally known as a “binder”, under which QBE authorised Temple to write certain classes of insurance on its behalf. I shall refer to the agreement in this case simply as “the binder” or “the agreement”, as convenient.

3

Temple came into existence in 1999 as a specialist legal expenses insurer with a view to taking advantage of the increase in the market for insurance of this kind resulting from the statutory provisions which allowed lawyers to enter into conditional fee arrangements for the conduct of litigation. Temple's business model was to provide insurance through intermediaries, mainly solicitors whose clients required cover against the risk of incurring liability for defendants' costs in proceedings conducted under conditional fee arrangements. ATE insurance in conditional fee cases represented the vast majority of its business. Acting under the authority of a binder, Temple's business model was to delegate the writing of insurance to solicitors who were authorised to issue certificates of insurance to individual clients. Although it did not carry the insurance risk itself, Temple had developed the business and was responsible for its administration. It was therefore able to market the cover as its own product and had a developed a large following among solicitors who regularly acted for clients under conditional fee arrangements. From 1999 to 2002 Temple had operated under binders provided by various Lloyd's syndicates and from 2003 to the end of 2005 it had operated under a binder provided by Europ Assistance Holdings Ltd (“Europ Assistance”). Towards the end of 2004 Europ Assistance indicated its intention to withdraw from the market when its binder expired and accordingly on 1 st December 2005 Temple entered into a binder with QBE which came into effect on 1 st January 2006. QBE had no previous experience in the writing of legal expenses insurance.

The contractual arrangements

4

The binder is a lengthy document and it is not necessary to set out many of its terms in full, although it will be convenient to refer to the wording of some clauses from time to time. By Section 1 QBE appointed Temple its agent to write various classes of legal expenses insurance on its behalf and to issue certificates of insurance to policyholders evidencing cover in respect of insurances bound under the agreement. Temple was also authorised to receive and hold premiums and premium refunds, to receive and hold claims money and to manage and settle claims in accordance with the terms of the binder. By Section 1.2 Temple was to inform its clients that in each case it would hold any such money as agent of QBE.

5

By Section 4 QBE authorised Temple to delegate underwriting authority to any other person, firm or company accepted by Temple who was authorised by the Financial Services Authority (“FSA”) or exempt from such authorisation. Authority to delegate in that way was essential to the operation of Temple's business, which depended on enabling individual firms of solicitors to grant cover to their clients. Section 4.1 of the binder obliged Temple to enter into “Coverholder Agreements” for that purpose substantially in the form set out in Schedule 1 and to send QBE each month a list of all persons to whom authority had been delegated.

6

The binder was expressed to continue in force for three years until midnight on 31 st zDecember 2008, unless terminated in accordance with its terms. Section 9, to which it will be necessary to refer in more detail at a later stage, made provision for termination in various circumstances, one of which was Temple's entering into any lineslip or binder with another insurer.

7

The coverholder agreements set out in Schedule 1 for ATE and BTE insurance respectively followed closely the form of Temple's existing agreements with coverholders. The form relating to ATE insurance contains the heading 'Temple Litigation Advantage Disbursements and Opponent's Costs Insurance Scheme for Personal Injury Cases' and provides for signature on behalf of Temple and the coverholder alone. It contains no reference to QBE as such. The agreement authorises the coverholder to issue policies of insurance to its clients by issuing certificates of insurance in specified terms. The BTE form is headed simply “Coverholder Agreement” and is in similar terms. It, too, provides for signature by Temple and the coverholder alone.

8

By Section 21 of the binder all insurances bound under it were to be subject to, or in substantially the same terms as, those contained in the documents attached as Schedule 2. The certificate for BTE insurance was not included in the appeal bundle, but there is no reason to think that it differed in any material respect. The ATE certificate contains several references to “the Insurer”, who is described as follows:

“Temple Legal Protection Limited are specialist underwriters with authority to underwrite and manage this insurance on behalf of QBE Insurance (Europe) Ltd.”

In the section dealing with complaints, the insured is directed first to Temple, and only then, if he is still dissatisfied, to QBE. The certificate gives as the insurer's head office and registered address the name and address of QBE at its offices in London. Finally, it is necessary to mention briefly a “Key Facts” document which also formed part of Schedule 2. It contains a summary of the main policy terms and was intended to be given to a potential insured. It states in terms that the insurance is underwritten by QBE.

9

From this brief description of the contractual arrangements it can be seen that individual policies of insurance were written by solicitor coverholders in favour of their clients acting under the authority granted by QBE to Temple and delegated to them by Temple and that the policy in each case took effect as a contract between the client and QBE. That was effectively common ground.

The dispute

10

Relations between QBE and Temple appear to have deteriorated early in 2006. QBE complained that Temple had failed to provide all the information required under the binder; Temple disputed that and said that QBE did not understand the workings of the legal expenses insurance market. Relations deteriorated further in or about June of that year when one of Temple's underwriting directors, Mr. Rocco Pirozzolo, resigned in order to take up the position of legal expenses underwriter with QBE. Temple thought that QBE was trying to steal its business. In August 2006 Temple served notice to terminate the binder and shortly afterwards entered into a binder with a new insurer, IGI, which took effect from 1 st October 2006. At that point it stopped writing new business for QBE. On 4 th January 2007 QBE wrote to Temple stating that it would assume all claims handling functions relating to policies underwritten by QBE, including the run-off. It also wrote to a number of coverholders asking them to deal directly with it in future.

11

In due course all matters in issue between the parties were referred to arbitration. The most urgent aspect of the dispute was whether QBE was entitled to take over the management of the run-off or whether Temple was entitled to insist on managing the run-off itself. The arbitrator directed that that question should be determined first, in part because Temple was pressing for interim relief. It was and remains common ground between the parties that the binder had been terminated no later than 2 nd December 2006. There was a dispute about precisely when and in what circumstances termination occurred, but that was not relevant to the issues before the arbitrator at the first hearing and he made no decision on the point. The arbitrator held that Temple's authority to manage the run-off of the business was effectively terminated by QBE's letter of 4 th January 2007. On appeal Beatson J. reached the same conclusion, albeit for different reasons.

The nature of the issue

12

There are two aspects of the dispute which it is worth mentioning at the outset. The first concerns the nature of the relationship between QBE and Temple; the second the terms of the binder. The relationship between QBE and Temple exists on two levels: although it is defined by the terms of the contract contained in...

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    ...the authority is not properly speaking a security at all: Doward, Dickson & Co v Williams & Co (1890) 6 TLR 316; Temple Legal Protection Ltd v QBE Insurance (Europe) Ltd [2009] Lloyd's Rep IR 544, at para 50. But there are situations lying between these polar positions where the relationsh......
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