Supreme Court cases
• AIB Group v Mark Redler & Co. Solicitors – judgment reserved on 5 June 2014. Issue is whether breach of trust damages awarded to lenders are limited to actual loss. • Plevin v Paragon Personal Finance Ltd – judgment reserved on 12 June 2014. Whether non-disclosure of the existence and amount of commission gave rise to an unfair relationship on sale of PPI. Also whether any failures by the broker to carry out a proper assessment were acts done "on behalf of" the lender. • International Energy Group v Zurich Insurance – judgment reserved on 16 July 2014. Issues around causation of mesothelioma in context of employer’s liability policy insurance period. • BPE Solicitors v Gabriel – permission to appeal granted, hearing not yet listed. Permission refused for other parties Little and High Tech. Issue: whether solicitors liable for a failure to exercise reasonable care and skill where there had been a serious drafting error in a facility letter. • Thevarajah v Riordan – permission is sought to appeal, application likely to be considered Sept 2014. If granted, may provide eagerly awaited higher court authority on relief from sanctions under CPR 3.9 following Mitchell/Jackson reforms. • Santander v RA Legal – permission is sought to appeal, application was lodged March 2014. Issue is whether solicitors "acted reasonably" under S.61 Trustee Act for breach of trust relief. • Flanagan & Coles v Greenbanks Ltd (t/a Lazenby), Mr Cross Part 20 Defendant – permission is sought by Mr Cross to appeal, application was lodged April 2014. Issues around effective cause of loss and whether negligence by another constituted a novus actus interveniens. • Coventry v Lawrence – appeal to be re-listed for hearing before SC after notice has been given to Attorney General and Sec. of St. for Justice. Issue is whether the order for costs in SC's earlier judgment, which includes a large success fee and ATE premium, infringes the respondents' rights under Art 6 of the ECHR to a fair hearing. Court of Appeal cases • Versloot Dredging v HDI Gerling – judgment reserved on 4 July 2014. Issue is whether the whole claim is forfeited if a fraudulent device is used. • Tokio Marine Europe Insurance v Novae Corporate Underwriting – hearing floating on 13/14 Oct 2014. Determination of preliminary issues on whether on the true construction of the retrocession, the defendant had agreed to follow the settlements of ACE under a master policy. • Dowling & Ors v Bennett Griffin (a firm) – hearing floating on 13/14 Oct 2014. Issue is whether litigation solicitors were negligent in not advising of risk that a third party’s insurance was not effective and ascertaining whether its insurers had been notified. • Aspen Insurance v Adana Construction – hearing floating on 13/14 Nov 2014. Interpretation of wordings in a building services combined contractor’s liability insurance policy following a crane collapse. • Wellesley v Withers – hearing window 1 Jul 14 – 2 Jan 15. Defendant solicitors appealing liability for drafting an agreement negligently as a result of misunderstanding instructions. Claimant may appeal additional heads of loss on mitigation issues. Other forthcoming developments Insurance Bill 2014 • The Insurance Bill was introduced into the House of Lords in July 2014. The Law Commissions have also reported their recommendations which formed the basis for the Bill. • The reforms propose a default scheme for business insurance in four areas of insurance law, allowing transparent opt-out of the scheme except for “basis of contract” clauses (which are to be abolished). The reforms include dropping the “duty of utmost good faith”. • It seems likely that the interpretation of the new “duty of fair presentation”, new remedies for non-disclosure, and/or whether or not an opt-out clause has been effective are issues that will be litigated in the Courts. • The Bill is following the procedure for uncontroversial Law Comm. Bills so it is hoped it will be in force in 2015 before the next general election. Third Party (Rights Against Insurers) Act 2010 • This Act allows a claimant to issue proceedings directly against the insurers of an insolvent defendant. It also provides for earlier disclosure of insurance arrangements and whether the policy would respond, without the need to issue court proceedings. The third party claimant may also notify the insolvent defendant’s insurers direct of its insurance claim. • The Act is not yet in force. Amendments need to be made to correct defects, which will be achieved once the Insurance Bill 2014 is enacted, hopefully in 2015. The Riot (Damages) Act 1886 • A consultation on proposals to reform and modernise the Riot (Damages) Act 1886 closed on 1 August 2014. We await the resulting report. Financial Services (Banking and Reform) Act 2013 • Part 4 of this Act (SS. 36-38) introduces a new criminal offence of reckless misconduct in the management of a bank. This will likely impact FI/D&O insurers for costs related to investigations or prosecutions. However, prosecutions would likely only result from “cases resulting in the most serious public harm and with the most serious misbehaviour.” • The date for commencement of Part 4 of the Act is likely to be 2015. Small Business, Enterprise and Employment Bill • This Bill, which was introduced to the house of Commons in June 2014, includes a power to order a disqualified director of an insolvent company to pay compensation to any creditors who have been caused loss by the director’s conduct. • If this provision becomes enacted it could significantly increase D&O exposure. Other cases of interest • UBS v Kommunale Wasserwerke Leipzig & Ors – Comm Ct – Trial ongoing. The bank is suing a water co. for $600m under collateralised debt obligations (CDOs) which defaulted during the financial crisis in 2008. The water co. alleges its directors entered into CDOs without authority and as a result of fraudulent misreps. • Mortgage Agency Services Number One Ltd v Edwards Symmons – Chancery Div – Hearing listed 8 June 2015 (5 day window). Issue is whether the lender is entitled to recover from an allegedly negligent valuer the break costs of interest rate swaps which the lender entered into to hedge risk under certain loans against properties for which the valuer gave valuations. • Deutsche Bank v Unitech – Comm Ct – Hearing listed 16 Sept 2014. Supreme Ct refused the Bank permission to appeal amendments to Unitech’s case on mis-selling arguments in relation to LIBOR manipulation allegations, so now a High Court battle will commence around those arguments. (NB a similar case, Graiseley v Barclays settled in April 2014). • Financial Ombudsman Service in R (on the application of Bluefin Insurance Services Ltd) v Financial Ombudsman Service – Admin Ct – Judicial Review application hearing listed for 7 October 2014. Bluefin is challenging the FOS’ jurisdiction over a complaint by a director relating to a D&O policy. Issues around whether the director fits the definition of a consumer in order to be an “eligible complainant”, also around whether a D&O policy can be a consumer transaction. • Accolade Wines v Volkerfitzpatrick & Others – TCC – 2nd half of split trial, listed for 2 Feb 2015. Large construction claim arising out of settling of concrete floor slab of warehouse, making warehouse unusable. Property damage and business interruption claim raising complex legal issues re causation, rectification and warranties. • Godiva v Travelers, Willmett Solicitors, RSA and The Law Society – Comm Ct – Pre-trial Review listed for 8 September 2014 and trial 12 November 2014. Large aggregation dispute concerning solicitors’ professional indemnity insurance and mortgage fraud. Potential for significant market impact for insurers. • Barclays v Landgraf & 2 other Dewey & LeBoeuf partners – Comm Ct – Trial listed 30 April 2015. The Defendants resist payment of certain loans as they argue that the bank and their former firm induced them to take on personal debt to keep the firm afloat. • John Michael Sharp v Sir Victor Maurice Blank & Ors – Chancery Div – Group Litigation Order sought in August 2014, awaiting decision. Lloyds Banking Group is being sued by 220 investors who claim being misled into supporting 2008 takeover of HBOS. Mesothelioma Act 2014 1 September 2014 • The Act creates a scheme which provides compensation to diffuse mesothelioma claimants exposed at work who are unable to trace a solvent employer or insurer to claim against. • This will be funded by an annual levy on active EL insurers. S.13 of the Act, which creates the power to require active insurers to pay a levy, comes into force on 1 Sept 2014. Scottish Independence Referendum 18 September 2014 • Credit ratings of Scottish insurers could be at risk if there is a “yes” vote due to the need to create a new financial regulator and regulatory bodies. Accelerated Payment Notices October 2014 • Under the Finance Act 2014, which came into force on 17 July 2014, HMRC can now issue accelerated payment notices which require tax to be paid within 90 days. The aim is to target those who have used aggressive tax avoidance schemes. • Professional Indemnity insurers may see an increase in mis-selling claims against financial advisers from October 2014 as the 90 day limits expire. Criminal Justice & Courts Bill 20 October 2014 • Section 49 of this Bill introduces the concept of “fundamental dishonesty” in personal injury claims. • If the Court finds that the Claimant has been fundamentally dishonest the Court must dismiss the claim, including any elements where no dishonesty proved. • Bill is at the report stage in the House of Lords. Line by line examination is scheduled for 20 October 2014. Cyber-Security Directive December 2014 • This draft EU Cyber Directive (aka Network and Information Security Directive or NIS Directive) has been voted through Parliament. The Commission seeks final agreement and adoption in Dec 2014. • It aims to harmonise cyber security across the EU. It introduces auditing and reporting obligations which could lead to an increase in cyber risk claims. © Copyright 2014 Bond Dickinson LLP. All rights reserved.