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

Wood v Days Healthcare: Court of Appeal allows insurer to withdraw admission of liability where quantum of claim was then greatly increased


The defendant's insurers appointed a loss adjuster to deal with a personal injury claim against the defendant. The loss adjusters were told by the claimant's solicitors that it was expected that the claim would fall within the fast track (ie have a limit of £25,000). Three months later, the loss adjusters formally conceded liability. The defendant subsequently applied for permission to withdraw this pre-action admission, pursuant to CPR r14.1A, but permission was refused by the judge at first instance. The defendant appealed and has now won that appeal.

The Court of Appeal noted that Practice Direction 14 provides that the court should have regard to all the circumstances of the case, including whether new evidence has come to light which was not available at the time the admission was made. It was held that the judge had been wrong to hold that there had been no new evidence in this case: "it seems to me indisputable that highly material new evidence had come to light. This was in the form of further evidence as to the extent of the injury allegedly caused and, in consequence, quantum. What had been presented in 2010 as "currently" a fast-track claim, involving less than £25,000, had subsequently become in 2012 a claim in excess of £300,000". Although an increase of "a few thousand pounds" was an acceptable and foreseeable "inherent risk", a ten-fold increase was entirely different. Furthermore, the judge's approach would discourage speedy admission of liability in (then) small claims.

Rosgosstrakh Ltd v Yapi Kredi: Court considers application to substitute name of insurer on claim form


An insurer, Rosgosstrakh Ltd ("R Ltd") paid out under a P&I policy which it issued to the defendant in 2010. Following this, the insurer claims it became aware of a material non-disclosure and sought to avoid the policy and reclaim its payment. The claim form, naming R Ltd as the claimant, was issued in 2016, but in 2017 (after the limitation period had expired), an application was made to change the name of the claimant to Rosgosstrakh Insurance Company (Public Joint Stock Company) ("R Ins Co") instead. The application was brought because, unbeknown to the claimant's solicitor at the time, R Ltd had undergone a corporate restructuring in 2015 and had ceased to exist. R Ltd's rights and obligations at that time had been transferred to R Ins Co, its successor company.

CPR r17.4(3) did not apply here, because this was not a case of a mere misnomer (ie the correct party has been sued but has been inaccurately described). Instead, CPR r19.5 applied because it deals with cases where it is necessary to add or substitute one party for another after the expiry of a limitation period. Applying the test from the Sardinia Sulcis case (namely, that the substitution should be allowed if it is possible to identify the correct party from the claim form by reference to a description), the judge concluded that "the identity of the person whom the solicitors intended should sue was in my judgment the insurer under the policy, meaning the entity which as at the date of the issue of the claim form was the insurer under the Policy detailed in the claim form (or who would, but for a valid avoidance of the Policy, have been the insurer)". As at the date of the claim form, only one possible entity matched that description: R Ins Co. Furthermore, this was not a case where R Ltd had simply assigned its rights to R Ins Co. Instead it had been "adjoined" to R Ins Co, thereby becoming its full legal successor and taking over all R Ltd's rights and obligations, including all its insurance contracts: "In these circumstances, the mistake can readily be seen to be an incorrect naming of an entity identifiable by description, as opposed to either (a) a deliberate selection of one entity over another or (b) a mistake as to legal rights".

Accordingly, the substitution was allowed.

Sharp v Blank: Court considers revision of a costs budget and the meaning of a "significant development"


Costs budgets cover costs to be incurred (not costs already incurred). PD3E para 7.6 provides that "Each party shall revise its budget in respect of future costs upwards or downwards, if significant developments in the litigation warrant such revisions …[In the absence of agreement between the parties] The court may approve, vary or disapprove the revisions having regard to any significant developments which have occurred since the date when the previous budget was approved or agreed" (emphasis added).

This case involves 7 claims that are subject to a group litigation order and the claimants applied for a costs management order. Total budgeted costs amounted to just under £37 million. The defendants subsequently said that certain significant developments required them to revise their budget and the claimants refused to agree to those revisions. Some points decided by Chief Master Marsh in this case included the following:

(1) The claimants were wrong to argue that when considering a revision to a budget, the court has no power to approve costs incurred before the date of the hearing. They had sought to argue costs incurred both before and after the application for approval was issued had to be left over to be considered on a detailed assessment. That argument was rejected, and it was instead held that the court has jurisdiction to revise a budget taking the last agreed or approved budget (or antecedent date, if ordered by the court) as the base reference point: "Costs which have been incurred since the date of the last agreed or approved budget (or the antecedent date) that relate to significant developments are, for the purposes of revision, placed in the estimated columns of the revised Precedent H in one or more phase. In some cases, it may not be obvious where they go (for example a late application for security for costs) but I can see no reason why Precedent H may not be adapted as necessary to accommodate work that does not easily fit in".

(2) One momentous event may be "significant", but a series of events (taken singly or together) may not be: "Use of the plural in the paragraph 7.6 suggests to me that the court should not over-analyse developments and break them down into smaller pieces before considering whether the test in paragraph 7.6 has been satisfied".

The following factors were found to be "significant developments" in this case: (a) The trial timetable had been extended by a total of 48 business days; (b) An application for specific disclosure had resulted in a large number of documents that had to be reviewed; and (c) The claimants had served an expert's report which was a change from the agreed basis upon which expert evidence was to be provided.

However, the following factors were found not to be "significant developments": (a) The claimants' application for third party disclosure; (b) Questions put to the defendants' experts by the claimants; and (c) Modest adjustments to the claimants' case following a change in approach by the claimants' expert.