A summary of recent developments in insurance, reinsurance and litigation law.

Dryden & Ors v Johnson Matthey: Supreme Court decides whether employees had suffered actionable personal injury – of possible interest to employers' liability insurers

http://www.bailii.org/uk/cases/UKSC/2018/18.html

The previous decisions in this case were reported in Weekly Updates 44/14 and 16/16. The claimant employees were exposed to complex halogenated platinum salts and as a result had developed sensitivity to platinum. Since this sensitivity can, with further exposure, lead to an allergy, the employees were removed from their regular posts and eventually handed in their notice. The claimants sought to argue that they had sustained actionable injury because the sensitivity had led directly to a reduction in their earning capacity. That argument was rejected at first instance and by the Court of Appeal. The Supreme Court has now unanimously allowed the claimants' further appeal.

The defendant had sought to argue that this case was analogous to Johnston v Rothwell, in which it was held by the House of Lords that proof of damage is an essential element in a claim in negligence and so symptomless pleural plaques were not compensatable damage. However, the Supreme Court said that this case was different because here there had been a change to the "physiological make-up" of the claimants, which required them to change their everyday lives in order to avoid further exposure which carried the risk of an allergic reaction. In Rothwell, though, the exposure to asbestos dust had not lead to, or contributed to, any condition which produced symptoms, even if the sufferer were to be exposed to further asbestos dust.

The defendant had accepted that physiological changes involved in sensitivity can constitute sufficient personal injury to found an action for negligence or breach of statutory duty if the defendant develops a sensitivity to something in everyday life, such as the sun. However, the Supreme Court said that "Ordinary everyday life is infinitely variable. For these claimants, their ordinary everyday life involved doing jobs of a type which, by virtue of their sensitisation, they can no longer do. In those circumstance, I do not see how their situation can be validly distinguished from the person who has developed a sensitivity to the sun".

Woodward v Phoenix: Court retrospectively validates service of claim form on solicitors who were not authorised to accept service

http://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWHC/Ch/2018/334.html&query=(phoenix)+AND+(woodward)

The claimant issued its claim form on 19th June 2017, a day before the limitation period for its claim expired. It purported to serve the claim form by sending it to the defendant's solicitors on 17th October 2017. Shortly after the time for service had expired, the defendant's solicitors advised that they had never been instructed to accept service and so service was defective (and now out of time). The claimant sought an order from the court, pursuant to CPR r6.15(2), that the steps which it had taken to bring the claim form to the claimant's notice (by an alternative method or at an alternative place) should constitute good service. Master Bowles has now found as follows:

(1) The defendant's solicitors had not given written notification to the claimant's solicitors that they were instructed to accept service. The mere fact that they had been instructed to handle the claim, and had told the claimant's solicitors of the steps which they would take should proceedings be issued, did not equate to an instruction to accept service.

(2) The defendant's solicitors were not estopped from denying that they were instructed to accept service. In order to rely on an estoppel arising from inaction or silence, it is first necessary to demonstrate that the defendant's solicitors were aware that the claimant's solicitors mistakenly believed they had authority to accept service. The claimant's solicitors had never asked the defendant's solicitors to confirm that they had authority or to give any response to communications. Even if they were aware of the claimant's solicitors' mistake, they would only have been acting unconscionably if they had elected to respond and had then failed to point out the mistake: "I do not think, however, that, as between potential parties to contested litigation, it is incumbent upon a party, aware of a mistake on the other side, not of his making and not requiring a response, to, nonetheless, raise the matter, by way of response. It does not seem to me that, as between parties to litigation, honesty and responsibility so requires".

(3) However, Master Bowles made the requested order under CPR r6.15(2). Crucial to his decision was the comment by Lewison J in Abela v Baadarani (see Weekly Update 05/11) that service is not "about playing technical games". Here, it was held that "by comparison with other cases, where, for example, a claim form has been provided 'for information', that, in this case, [the defendant's solicitors were] aware from 17th October and within the lifetime of the Claim Form, that the service effected was intended to commence the necessary processes under the CPR for dealing with the Claim. On that footing, it can, as it seems to me, well be said that the position adopted by [the defendant's solicitors], in failing to draw attention to the defect in service, amounted to the playing of a technical game". That was said to amount to a good reason to validate service.

COMMENT: After the draft judgment was sent to the parties in this case, the judge's attention was drawn to the recent Supreme Court decision in Barton v Wright Hassell (see Weekly Update 7/18), in which it was held that the defendant's solicitors were not under any duty to advise the appellant that service was invalid and "Nor could they properly have done so without taking their client’s instructions and advising them that the result might be to deprive them of a limitation defence. It is hardly conceivable that in those circumstances the client would have authorised it." Nevertheless, Master Bowles said that the Supreme Court had not been asked to consider (as he had been) the impact and effect of the duty to further the overriding objective and he felt that the Supreme Court had not given any answer on that argument.

He has, however, given permission to appeal this case to the Court of Appeal.

Banca Turco Romana v Cortuk & Ors: Court considers the scope of the Chabra jurisdiction (freezing orders against third parties)

http://www.bailii.org/ew/cases/EWHC/Comm/2018/662.html

Where there is good reason to suppose that assets held by third parties really belong to the defendant, TSB Private Bank International v Chabra [1992] is authority for the principle that the court has power to freeze those assets. In Parbulk II v PT Humpuss (see Weekly Update 43/11), Gloster J confirmed that the Chabra-type jurisdiction is not limited to cases where the third party holds, or has received, assets beneficially belonging to the principal defendant. Where the defendant has a debt or other receivable owing to it by the third party, the English court has jurisdiction to grant a freezing order against the third party to restrain it from dissipating its own assets (up to the amount of the debt).

In this case, the novel issue was whether the Chabra jurisdiction could also be invoked where the third parties have been closely "mixed up" in assisting the defendant in dealing with assets in the past (and, so it might be argued, unless restrained, there is a real risk that they will continue to do so and so assist him to breach a freezing order made against him).

Popplewell J said that "I am inclined to think that section 37, which is in very wide terms, would permit ancillary relief against a person mixed up in the affairs of a CAD [ie "the cause of action defendant"] to restrain that person from doing acts which would assist the CAD to deal with assets in a way which would defeat the freezing order against the CAD, in an appropriate case where such relief was necessary to render the primary relief against the CAD effective. It might arise, for example where a secretary was habitually used to carry out the CAD’s disposition instructions".

However, the judge also said that it will be a rare case in which such an argument will work. He said that that may be "because in the case of a domestic respondent, sufficient protection is given by serving notice on the NCAD [ie "a non cause of action defendant"] of the freezing order against the CAD; and in a case where the NCAD is abroad and merely “mixed up in” the affairs of the CAD without exercising control over disposition, the restrictions on the extraterritorial reach of orders will usually preclude the exercise of any such jurisdiction (e.g. in relation to foreign bank branches). Moreover, if a party is threatening to assist a CAD to breach a freezing order, the appropriate course may be to allege a threatened tort (e.g. conspiracy to injure by unlawful means) and to seek quia timet relief against that party as a CAD".

In this case, the judge discharged the freezing orders made against the third parties because of various material non-disclosures by the claimant when they were first granted.

Tuke v JD Classics: Judge finds Notice to Prove was served late

http://www.bailii.org/ew/cases/EWHC/QB/2018/531.html

Under CPR r.32.19(1), a party to civil litigation shall be deemed to admit the authenticity of a document disclosed to him under CPR r.31 unless he/she serves notice that he/she wishes the document to be proved at trial (requiring a party to “prove” a document means that the party relying upon the document must lead apparently credible evidence of sufficient weight that the document is what it purports to be). Under CPR r.32.19(2), a notice to prove a document must be served by the latest date for serving witness statements, or within seven days of disclosure of the document, whichever is the later.

In this case, certain witness statements had been struck out and further witness statements were ordered to be served. The claimant served its notice to prove before those further witness statements were served, but after the original date given for service of witness statements. Knowles J has now held that the notice was served late. This was not a case where more than one round of factual witness evidence had been contemplated: the deemed acceptance of the authenticity of the documents in question had taken place on the original date when the witness statements had to be served. However, applying the principles from Denton v TH White (see Weekly Update 26/14), the judge agreed to extend time for compliance with the rule. The defendant had known for some time that the claimant challenged the authenticity of the documents, and although the reason for the default was simply that the claimant's legal team had made a mistake, this was "not a case of a deliberate and intentional flouting of a rule designed to deliberately wrong foot an opponent".