A summary of recent developments in insurance, reinsurance and litigation law.
This Week's Caselaw
Harlequin Property v Wilkins Kennedy: Whether judgment should be ordered in dollars or sterling/appropriate rate of interest
Given the current rates of exchange for sterling, it is increasingly important for defendants to know in which currency the judgment sum will be expressed and which exchange rates should be used. The White Book notes that a judgment can be given in a foreign currency or its sterling equivalent at the time of payment. Prior caselaw has established that damages should be calculated "in the currency in which the loss was felt" by the claimant (see The Canadian Transport ).
Here, the judge had identified the recoverable sum in the main judgment as USD 11 million approximately, and the defendant sought an order that the judgment be expressed in sterling and should be calculated in accordance with the exchange rates set out in the claimant's own evidence at trial. Coulson J agreed, on the basis that all the relevant sums paid in the case, and all the figures mentioned in contemporaneous documents, had been in sterling.
A further issue was the applicable rate of interest. The court will ask what rate of interest the claimant would have had to pay in order to borrow money to replace the money which he has been kept out of. In this case, the claimant sought to recover sub-prime borrowing rates ie the rate applicable to a small hypothetical company "whose only business was a development of a new resort in the Caribbean, seeking to raise funds in sterling and in the UK and which could not offer security" (namely, around 12-15%). The judge held that such a comparison was "artificial and unhelpful" because "The claimant did not borrow money and, on the balance of probabilities, I find that it would never have been lent any money because of its complete lack of financial security and credit-worthiness... It would be wholly wrong in principle for the claimant now to take advantage of their own sub-sub-prime status to increase the recoverable interest rate".
The defendant was ordered to pay 1.5% above base for the relevant period.
Elkamet v Saint-Gobain: Whether party benefiting from a costs order should be compensated for exchange rate movements
Recent movements in the sterling exchange rate were also the subject of this case. A novel point was raised by the party which was entitled to its costs in this action. It argued that, since it had had to exchange euros into pounds in order to pay its solicitors' bills, it should be compensated for losses resulting from the decline in the exchange rate between the pound and the euro since 23rd June 2016.
Arnold J agreed with this argument in principle: "If one accepts, as I do, that in principle the court has power to make an order for damages or costs in a foreign currency, then it seems to me to follow as a matter of logic that the court ought to have power, if it decides to make an order in sterling, to compensate for any exchange rate loss."
However, the judge also recognised the practical difficulties that this principle might raise. For example, no court will be able to predict what the exchange rate will be at the date of payment (which is the relevant date).
Here, the judge calculated the exchange rate loss as at the day before's exchange rate, and then rounded this figure down (from £23,555 to £20,000) to recognise the possibility that by the date of payment, the exchange rate might have appreciated again.
Agents Mutual v James: Whether an application to court can be amended
The claimant applied, by notice, for summary judgment on the defendant's counterclaim. After judgment on the scope of the application, the claimant sought to amend his application, to add in further grounds. The issue to be decided was therefore whether a party can simply amend its application to the court or whether this instead amounts to a further, free-standing, application. Ordinarily, this would not matter, but in this case, a deadline had been set to bring the application for summary judgment, and that deadline had since passed (so that, if this is a new application, it would be subject to a stay).
There is no prior caselaw on whether an application notice under the CPR may be amended once issued.
Master Matthews held that the court's general case management power under CPR r3.1(2)(m) allows the court to permit an amendment: "In my judgment it will often further the overriding objective if the court allows all issues between the parties about summary judgment to be decided at the same time, rather than require the applicant to issue a fresh application". However, on the facts of the case, Master Matthews did not think it would be right to give permission to amend.