Brokers Hanover Park Commercial Ltd (HPC) negligently failed to obtain appropriate excess layer cover for DHL’s valuation activities following its acquisition by the Erinaceous Group. The allegation of contributory negligence against the insured was rejected. HPC’s claim against the placing brokers, Forbes, was successful subject to a finding of contributory negligence of 80 per cent. (Dunlop Haywards (DHL) Ltd v Barbon Insurance Group Ltd)
The Court of Appeal dismissed Axa’s appeal from the decision that their claims against 89 firms of solicitors were time-barred. Axa, as assignee of the insurer National Insurance and Guarantee Corp (NIG), alleged that the firms acted in breach of duty to NIG in accepting and/or conducting about 26,000 claims. NIG provided after the event (ATE) insurance for the claims, leading to alleged losses of about £65 million. NIG suffered a loss sufficient to start the limitation period when the policies were issued because the liabilities under the ATE policies were greater than they should have been. (Axa Insurance Ltd v Akther & Darby Solicitors – see article here)
A breach of a continuing or promissory warranty does not automatically cancel the cover unless this has been stipulated by underwriters in clear terms as a consequence of the breach. If this is not stipulated, underwriters will not be on risk for as long as the insured was not complying with the warranty. Here materia misrepresentations had been made by the insured concerning its burglary insurance and they were sufficient to act as an inducement. The claim for an indemnity under the policy failed. (AC Ward and Son Ltd v Catlin (five) Ltd)
Privilege and tax advice Legal advice privilege applies only to legal advice given by a lawyer and not to legal advice given by a non-lawyer such as an accountant. Those who obtain tax advice from accountants need to be aware that the advice they receive is vulnerable to disclosure even though the same advice would be privileged were it to have been given by a lawyer. (R (Prudential plc) v Special Commissioner of Income Tax)
Part 36 offers
A Part 36 offer which has been rejected can subsequently be accepted. However, the court’s permission is required if the trial has already started (see CPR 36.9). It will not be appropriate to give permission where there has been a material change of circumstance that would make it unjust to do so. (Sampla v Rushmoor Borough Council)
Insurers’ rights to see insureds’ documents
Where an insurer is notified of circumstances that may give rise to a claim, he cannot call for the insured to disclose papers that are confidential and/or privileged in order to investigate cover. Only once a claim is made is the client deemed to have waived privilege over relevant documents. (Quinn Direct Insurance Ltd v The Law Society – see article here)
Recovery of LMX spiral losses
Equitas was entitled to use actuarial models to prove losses sustained under contracts of retrocessional excess of loss reinsurance written within the London Market Excess of Loss (LMX) spiral and did not have to establish the actual loss under each contract. The models provided answers that were representative of the actual position and it did not, therefore, matter that they did not recreate the LMX spiral. (Equitas Ltd v R&O Reinsurance Company (UK) Ltd v Ace European Group Ltd)
Solicitors Regulation Authority consultations
The Solicitors Regulation Authority (SRA) has recommended abolishing the assigned risks pool (ARP), the insurer of last resort for firms that cannot obtain cover on the open market. The consultation closes on 12 February 2010. In a parallel consultation, the SRA proposes to change the definition of a “successor practice” in the Solicitors’ Indemnity Insurance Rules.
Third Parties (Rights Against Insurers) Bill
This Bill had its first reading in the House of Lords on 23 November 2009 and its second reading on 7 and 9 December 2009. Review of civil litigation costs Jackson LJ's final report was published on 14 January 2010.
Consumer insurance reforms
On 15 December 2009 the Law Commissions published the Consumer Insurance (Disclosure and Representations) Bill and their final report on the issue of what a consumer should tell their insurer before taking out insurance.