Expedition in the Commercial Court

There are words which have a meaning in the law which is different, and usually more prosaic, than their ordinary meaning. Expedition is one such word. An order granting expedition of a trial is of course nothing more than an order that it should take place sooner than it would if it were listed to come on for trial in the ordinary way.

The Commercial Court Guide[1] provides that the Commercial Court is able to provide an expedited trial in cases of sufficient urgency and importance,[2] and that a party seeking an expedited trial should apply to the Judge in Charge of the Commercial Court on notice to all parties at the earliest possible opportunity.[3] The application should normally be made after issue and service of the claim form but before service of particulars of claim.[4]

No further guidance is given. A summary of the relevant principles in a judgment of the Commercial Court is therefore welcome. In Apache Beryl I Ltd v Marathon Oil UK LCC[5], Males J heard an application in mid-August 2017 for an expedited trial to take place at the beginning of the next term, which was then in two months’ time or less, with a view to judgment being given, or at least a decision being given if possible, before 21 October 2017. The claimant’s position was that without a decision by 21 October 2017 as to its rights and obligations under an agreement with the defendant, it was likely to lose the benefit of a put and call option in which that was the longstop date.

Males J said that it was agreed between the parties that the decision whether to order expedition was discretionary, and that there were four factors to be taken into account:[6]

  • A threshold question of whether objectively there was urgency
  • The state of the Commercial Court list
  • The procedural history including delay by the applicant
  • Whether there would be any irremediable prejudice to the respondent

Of these, he said, the fourth factor – which might also be referred to as the good administration of justice or whether a fair trial was possible – was the most important.[7] Males J referred to the decision of the Court of Appeal in W L Gore & Associates GmbH v Geox SpA[8] for the principle that the Commercial Court seeks to assist commercial people in resolving their disputes, but does so in a way which is consistent with the interests of others and with justice and fairness, so that a critical matter in deciding to order expedition is whether a fair trial is possible.[9] If a fair trial is not possible, it necessarily follows that an unfair trial should not be ordered. On the other hand, if a fair trial is possible and there is a prospect that the court can accommodate it, the approach set out in Gore v Geox would strongly encourage the court to do so.[10]

Males J decided that a fair trial was possible and ordered an expedited trial starting on 16 October 2017, ie two months later. His assessment of the four factors inevitably depended on the facts of the case, but certain of his observations have wider relevance:

(1) The judge was willing to approach the application on the basis that it might but would not necessarily be necessary to stand out from the list another case which had been fixed for a considerable time. He recognised that if one of those trials was to be vacated, this would be at considerable expense to the parties in whatever case was selected, and that would no doubt leave them with a real and justified sense of having been unfairly treated.[11]

(2) The claimant had known about the longstop date of 21 October 2017 since December 2016, but sought expedition only in August 2017. Proceedings were started in mid-May but expedition was not sought at that stage as it could have been and should have been in accordance with the Commercial Court Guide. To some extent, the judge found, this was a deliberate, tactical decision by the claimant not to apply for expedition, although he also accepted that there was a hope that matters could be resolved by agreement and that it was only after a lengthy meeting on 31 July 2017 that it became apparent that this hope was to be disappointed.[12] The procedural history was therefore a factor against expedition, but not a decisive factor; it would be ‘disproportionately penal’ to refuse the application on this ground if it was otherwise appropriate to order expedition.[13]

(3) Particulars of Claim, a Defence and a Reply had been served together with various requests for information, and the defendants proposed to serve a Rejoinder. The judge said that the pleadings tended to make the dispute appear more complex than it really was, and that what was needed was a succinct and clear statement of each party’s position on the key issues.[14]

(4) Disclosure had not taken place, and the judge observed that this was case in which disclosure was likely to be limited – possibly to documents which each party relied on with scope for specific requests where necessary and possibly some disclosure on one particular issue which he identified.[15] There would be some factual and expert witness evidence, but this was likely to be limited.[16

(5) Urgent directions needed to be given, and the judge said that he would hold a case management conference the following day.[17]

  1. Admiralty and Commercial Courts Guide (10th Edition, last updated September 2017).
  2. Para J1.1.
  3. Para J1.2.
  4. Para J1.2.
  5. [2017] EWHC 2258 (Comm).
  6. Para 11.
  7. See paras 11-12 and 23.
  8. [2008] EWCA Civ 622.
  9. See paras 12-13.
  10. Para 23.
  11. Paras 19-20.
  12. Para 21.
  13. Para 22.
  14. Paras 26-27.
  15. Para 28.
  16. Para 28.
  17. Para 31.

A tale of two solicitors – a new twist on inadvertent disclosure of privileged documents

A recent decision of the Court of Appeal makes a good subject for a short, end-of-term post about the equitable discretion – now codified in CPR 31.20 – to restrain the use of a privileged document which has been disclosed in error.

In Atlantisrealm Ltd v Intelligent Land Investments (Renewable Energy) Ltd,[1] the Court of Appeal added a ‘modest gloss[2] to the principles it had formulated in Al Fayed v The Commissioner of Police for the Metropolis[3] and applied in Rawlinson & Hunter Trustees SA v Director of the Serious Fraud Office (No 2)[4] in relation to CPR 31.20. The gloss extended the principle from the solicitor who first reviewed disclosure, and who did not appreciate that a document had been disclosed in error, to his ‘more percipient’ colleague, who did. The Court of Appeal also rejected the suggestion that where the mistake as to disclosure is made by a very junior lawyer, that lawyer has to give evidence in order for the principle to apply.

CPR 31.20 provides: ‘Where a party inadvertently allows a privileged document to be inspected, the party who has inspected the document may use it or its contents only with the permission of the court’. In Atlantisrealm, a junior lawyer made a mistake in categorising an email, labelling it disclosable rather than either privileged or requiring review by Mr Cook, a more senior lawyer. The email was disclosed and subsequently inspected. Mr Fallon, a solicitor for the opposing party, Intelligent Land, reviewed the disclosure but did not spot the mistake. He then had a meeting with another solicitor for Intelligent Land, a Mr Newton.

The email was then sent to witnesses for comment, before Mr Newton sent an email to Mr Cook about arrangements for a settlement meeting, which concluded: ‘I don’t know if you have started your consideration of disclosure yet? The email below will be of interest to you.’ The email, while not fatal to the disclosing party’s case, provided useful ammunition in relation to the issue of contractual construction, and in particular the parties’ shared subjective understanding.

Mr Cook responded immediately, saying that the email was privileged and had been disclosed inadvertently, and requesting its deletion. Mr Newton refused, and Atlantisrealm applied under CPR 31.20 for an injunction prohibiting Intelligent Land from making use of the email.

Mr Cook explained in a witness statement how the disclosure exercise had been carried out. Jackson LJ said that the account of how disclosure had been carried out was in line with what one would expect in any case where people, rather than machines, were carrying out the disclosure exercise: a small team of trainees and junior lawyers carried out a preliminary sift. They identified documents which were obviously disclosable or obviously privileged and referred up to the Mr Cook any documents about which they were unsure. One of the young lawyers made a mistake, putting the email into the ‘disclosable’ category, when he or she ought to have classified it as privileged or referred it to Mr Cook

In Jackson LJ’s view, and in disagreement with the judge below, the fact that the junior lawyer who made the mistake did not give evidence was irrelevant, because it was ‘perfectly clear’ what had happened: ‘Neither [the responsible solicitor], nor the relevant partner, nor the client ever took a considered decision to waive privilege’ in respect of the email, which appeared in the list of documents ‘purely as the consequence of a mistake made by a junior lawyer’.[5] This was therefore a case of inadvertent disclosure within the meaning of CPR 31.20.

The Court of Appeal accepted that the evidence showed that Mr Fallon, the first solicitor to review the documents, had thought that the email had been disclosed deliberately, because it was one of a number of emails between the opposing party and its solicitors which had been disclosed. Jackson LJ held however that the terms of the email from Mr Newton to Mr Cook showed that Mr Newton had appreciated that the email had been disclosed in error: ‘Mr Newton was drawing the email to Mr Cook’s attention in the belief that Mr Cook was unaware of it. If there had been a deliberate decision to disclose privilege in respect of such an important document, it is hardly likely that Mr Cook would have been unaware of it’.[6]

The ‘modest gloss’ which the Court of Appeal added to the principles established in Rawlinson was to allow Moore-Bick LJ’s reference to ‘the understanding of the person who inspected the document[7] to apply in a ‘two solicitor’ situation, so that ‘If the inspecting solicitor does not spot the mistake, but refers the document to a more percipient colleague who does spot the mistake before use is made of the document, then the court may grant relief. That becomes a case of obvious mistake.[8]

All that remained was for the Court of Appeal to consider how the discretion should be exercised: whether to permit the receiving party to make use of the document, or to prohibit its use. This is an equitable jurisdiction, long pre-dating CPR 31.20, and there are no rigid rules.

Atlantisrealm argued that they had made extensive use of the email and their witnesses were well aware of it, and that they would suffer and perceive an injustice if they were not permitted to use it at trial. Jackson LJ observed that the ‘use’ relied on had all taken place after a meeting between Mr Newton and Mr Fallon at which Mr Fallon had drawn Mr Newton’s attention to the email. He concluded that it was not therefore unjust to grant an injunction prohibiting its use; and the judge at first instance had indicated that this was how he would have exercised his discretion. The injunction was therefore granted.

In closing, Jackson LJ made three general observations. First, in the electronic age, even with the help of sophisticated software, disclosure of documents can be a massive and expensive operation. Mistakes will occur from time to time. Secondly, when privileged documents are inadvertently disclosed (as is bound to happen occasionally), if the mistake is obvious, the lawyers on both sides should co-operate to put matters right as soon as possible. And thirdly, the disclosure or discovery procedure in any common law jurisdiction depends upon the parties and their lawyers acting honestly, even when that is against a party’s interest. The duty of honesty rests upon the party inspecting documents as well as the party disclosing documents.[9]

Jackson LJ’s final comment? That it should not be necessary for either the parties or the courts to devote their resources to resolving disputes of this nature between solicitors.[10]

  1. [2017] EWCA Civ 1029.
  2. Para 48 (Jackson LJ).
  3. [2002] EWCA Civ 780.
  4. [2014] EWCA Civ 1129, [2015] 1 WLR 797.
  5. Para 37.
  6. Para 43.
  7. At para 15.
  8. Jackson LJ at para 48.
  9. Para 55.
  10. Para 56.

The Business and Property Courts of England and Wales – launch on 4 July 2017

Sir Geoffrey Vos, the Chancellor of the High Court and a former Chairman of the Bar Council, came to the Bar Council meeting on 20 May 2017 to talk to us about the newly-styled Business and Property Courts. This followed the announcement on 13 March 2017 that, from June, the specialist civil courts including those in the Rolls Building in London (the Commercial Court, the Technology and Construction Court, and the Chancery Division of the High Court) were to be known as the ‘Business and Property Courts of England and Wales’. The 13 March 2017 press release said that this was to be the new name for the ‘international dispute resolution jurisdictions’ of England and Wales, and to ‘act as a single umbrella for business specialist courts across England and Wales’. The rebranding therefore has international and domestic implications.

Originally planned for June but delayed due to the General Election, the launch date for the new Business and Property Courts is now 4 July 2017.

One of the aims of the new name is to modernise the image of the Chancery Division. Sir Geoffrey said that the name ‘Chancery Division’ evoked Dickens and Bleak House.[1] The opening chapter of Bleak House is ‘In Chancery’, and Dickens mercilessly satirises the court:

This is the Court of Chancery, which has its decaying houses and its blighted lands in every shire, which has its worn-out lunatic in every madhouse and its dead in every churchyard, which has its ruined suitor with his slipshod heels and threadbare dress borrowing and begging through the round of every man’s acquaintance, which gives to monied might the means abundantly of wearying out the right, which so exhausts finances, patience, courage, hope, so overthrows the brain and breaks the heart, that there is not an honourable man among its practitioners who would not give—who does not often give—the warning, “Suffer any wrong that can be done you rather than come here!”

It is little wonder, then, that the new name is intended not only to be more readily understood both at home and abroad, but also to signal that the bad old days of Jarndyce and Jarndyce[2] really are gone.

By contrast, the Commercial Court has always prided itself on being a modern court responsive to the needs of business:

The Commercial Court was set up in 1895 following demands from the City of London and the business community for a tribunal or court manned by judges with knowledge and experience of commercial disputes which could determine such disputes expeditiously and economically, thereby avoiding tediously long and expensive trials with verdicts given by judges or juries unfamiliar with business practices.[3]

Of course, even the Commercial Court is not immune to increased competition from overseas – as its judges and those of us who practise in it are keenly aware. The Commercial Court in London has an international reputation, and it is hard to see what the Commercial Court has to gain – and easy to see what it has to lose – from being bracketed together with the Chancery Division under a new and unfamiliar name. The City UK, which has worked hard to promote London as a major centre for the resolution of international commercial disputes, has however welcomed the rebranding as a ‘forward-looking decision, indicative of the judiciary’s determination to ensure that Britain’s legal system remains world-leading and at the forefront of dispute resolution globally’ and as giving ‘greater clarity to users about the focus and coverage of legal services available at the Courts’.

On the domestic front, the press release referred to ‘the Commercial Court, (including the Admiralty Court and Mercantile Court)’. This formulation – suggesting that there is a single Mercantile Court which is somehow part of the Commercial Court – is also new. Until now, the Mercantile Courts have formally been separate from the Commercial Court, with their own Mercantile Court Guide (not updated since 2012 and as a result now unusable in some respects), although in London there has been a considerable overlap. The London Mercantile Court is administered by the Commercial Court listing office, and there is considerable fluidity between the judges of the two courts, with Commercial Court judges frequently hearing applications in the London Mercantile Court, and the Mercantile Court judge in London, HHJ David Waksman QC, frequently sitting in the Commercial Court.

It is intended, too, that following the launch on 4 July 2017, the Rolls Building courts in London will co-operate more closely with the Mercantile Courts in the regions. Sir Geoffrey said that in principle no case would be too large to be heard outside London, and that in time, the ‘judicial fire-power’ in specialist centres would increase. Although the press release said that the Mercantile Courts in Birmingham, Manchester, Leeds, Bristol and in Cardiff would be renamed Business and Property Courts, with expansions to Newcastle and Liverpool likely in the future, Sir Geoffrey said that the Mercantile Courts would become Commercial Circuit Courts, and their judges would be Commercial Circuit Judges. In addition, the financial limits in the county court have not been increased for some years, and Sir Geoffrey expressed hope that this would happen, in order to allow them to take on more business.

Sir Geoffrey emphasised that the specialist procedures in the Commercial Court, Technology and Construction Court and Chancery Division will remain: he said that procedures in these courts are an internal matter, and the changes are outward-facing. He added that the question which he is asked most often by barristers is what we should put in the heading of statements of case once the new courts have been formally launched. This perhaps sheds light on the personality traits of some barristers (well known to their families but perhaps less clearly perceived by the barristers themselves), and suggests that they may be less willing than Sir Geoffrey to leave behind the era of Jarndyce and Jarndyce. They will no doubt be relieved to hear that the launch of the Business and Property Courts on 4 July 2017 will bring with it a new Practice Note in which the answer to this[4] and similar procedural puzzles can be found.

  1. He said, too, that ‘Mercantile Court’ brought to mind an Edwardian gentleman. The name belies the recent origin of these courts: they are in fact a modern creation, and what is now the London Mercantile Court was originally named the Central London County Court Business List.
  2. The case at the heart of Bleak House: ‘Jarndyce and Jarndyce drones on. This scarecrow of a suit has, in course of time, become so complicated that no man alive knows what it means. The parties to it understand it least, but it has been observed that no two Chancery lawyers can talk about it for five minutes without coming to a total disagreement as to all the premises.’ (Chapter 1, ‘In Chancery’).
  3. See https://www.judiciary.gov.uk/you-and-the-judiciary/going-to-court/high-court/queens-bench-division/courts-of-the-queens-bench-division/commercial-court/about-us/.
  4. Sir Geoffrey did in fact provide the answer at the Bar Council meeting. If I noted it down correctly, the format will (for example) be: ‘IN THE HIGH COURT OF JUSTICE’, below that ‘BUSINESS AND PROPERTY COURTS’, and then the name of the court – eg ‘COMMERCIAL COURT’.

Damages for late payment of insurance claims – counting down to 4 May 2017

Summary

The Enterprise Act 2016 received royal assent on 4 May 2016. From 4 May 2017, a term will be implied by statute into new policies of insurance, and variations to those policies, that if the insured makes a claim under the policy, the insurer must pay any sums due within a reasonable time. This means that, for the first time, there will be a generally available right to damages in English law for late payment of insurance claims. This is in addition to the right to an indemnity under the policy and any interest. The limitation period for a claim for damages for late payment will be one year from the date of payment of the indemnity by the insurer.

The need for this reform

It is a surprising feature of English insurance law that there is no general right to damages for late payment of an insurance claim. This was recently confirmed in the Supreme Court, in a case about jurisdiction (The Alexandros T). This summary of the law by Longmore LJ[1] was approved by Lord Clarke in the Supreme Court[2]:

As a matter of English law, an insurer commits no breach of contract or duty sounding in damages for failure promptly to pay an insurance claim. The law deems interest on sums due under a policy to be adequate compensation for late payment; this is so, even if an insurer deliberately withholds sums which he knows to be due under a policy, see Sprung v Royal Insurance [1999] Lloyd’s Rep IR 111 approving the decision in The Italia Express (No 2) [1992] 2 Lloyd’s Rep 281. … English law, moreover, gives no separate contractual remedy to an insured who complains that an insurer has misconducted himself before settling a claim. In either case the remedy of the insured is to sue the insurer and, if no settlement is forthcoming, proceed to judgment.

The principle that there is no right to damages at common law for late payment of damages has long been under attack:

  • It was applied with ‘undisguised reluctance’ by the Court of Appeal in Sprung v Royal Insurance (UK) Ltd[3] in 1996.
  • The Court of Appeal granted permission to appeal in 1997 in a case which raised the issue but the appeal was not heard.[4]
  • Rix LJ described it as ‘controversial’ in 2005, and said that if the issue reached the House of Lords the law might be clarified or changed (he nonetheless declined to grant permission to appeal, saying that was a matter for the House of Lords)[5]; he also questioned it in extra-judicial remarks in 2009[6].

In Sempra Metals Ltd v Inland Revenue Commissioners[7], the House of Lords held that the loss suffered as a result of the late payment of money was recoverable at common law, subject to the ordinary rules of remoteness which apply to claims for damages; but the question of whether Sempra might permit a claim for late payment under a contract of insurance remains undecided.

Other possible routes to an award damages for late payment of insurance claims were also blocked: breach of the duty of utmost good faith by insurers does not sound in damages[8]; and an implied term that insurers handle claims with reasonable speed and efficiency was rejected by Mance J in Insurance Corpn of the Channel Islands Ltd v McHugh[9] as neither obvious nor necessary for business efficacy because any such term, if implied, would not apply only in respect of insurers’ conduct, but would have to be mutual, so that the reasonableness of the conduct of each party in the negotiation of the claim would have been subject to review.[10]

There is a statutory cause of action for late payment under a policy of insurance, but this is only of limited application. It arises under ICOBS 8.1.1[11] and ss 150 (former) and 138D (current) of the Financial Services and Markets Act 2000[12]. It is available where the insured is a ‘private person’. This means an individual – not only a consumer – and any person who is not an individual, unless he suffers the loss in question in the course of carrying on business of any kind[13]. The statutory cause of action is separate from the jurisdiction of the Financial Ombudsman Service (‘FOS’), and unlike the FOS, is not subject to a financial limit (the current FOS limit is £150,000). In practice, the statutory cause of action was little-used in insurance cases. It will not be abolished, but will largely cease to have practical importance in relation to late payment of insurance claims when the new right to damages is available.

Which contracts of insurance will be subject to the new implied term?

The Insurance Act 2015 was passed on 12 February 2015 and entered into force on 12 August 2016. This is not the relevant date for the new right to damages: the Enterprise Act 2016 was passed on 4 May 2016, and provides that the provisions in relation to damages for late payment enter into force one year later, on 4 May 2017.[14] The new right to damages for late payment of insurance claims applies only in relation to contracts of insurance entered into on or after 4 May 2017.[15] For policies entered into before that date, the old law continues to apply.

The new implied term

The implied term is introduced by s 13A(1) of the Insurance Act 2015. This provides:

It is an implied term of every contract of insurance that if the insured makes a claim under the contract, the insurer must pay any sums due in respect of the claim within a reasonable time.

What is ‘a reasonable time’?

It follows from the way that the implied term is expressed in s 13A(1) that the right to payment within a reasonable time arises only if the insured makes a claim. As one might expect, ‘[a] reasonable time includes a reasonable time to investigate and assess the claim[16], and what is reasonable will depend on ‘all the relevant circumstances’. The statute lists some ‘examples of things which may need to be taken into account’. These are:[17]

  • the type of insurance’ – for example, travel insurance, or business interruption insurance;
  • the size and complexity of the claim’ – for example, a straightforward claim for storm damage to roof of house, or a major fire involving an insured in financial difficulties and suspected of arson. The Law Commission suggest in their July 2014 Report[18] that a claim may be complicated by its location, and that if, for example, an insured peril occurs abroad, its investigation may be more difficult;
  • compliance with any relevant statutory or regulatory rules or guidance’. This might lead to allegations of breach of ICOBS even where the statutory cause of action under s 138D FSMA does not arise – for example, there is an obligation under ICOBS 8.1.1(2) to ‘provide reasonable guidance to help a policyholder make a claim and appropriate information on its progress’;
  • factors outside the insurer’s control’. An obvious example would be delay caused by the insured itself, perhaps in failing to provide information sought by the insurer. The Law Commission suggest[19] that this might extend to a situation where there were unusually high numbers of claims, for example due to widespread flooding, and insufficient numbers of loss adjusters or surveyors available in or around the affected area.

Delay in paying a disputed claim

The insurer does not breach the implied term ‘merely by failing to pay the claim (or the affected part of it) while the dispute is continuing’, but:

  • the burden is on the insurer[20] to show that there were ‘reasonable grounds for disputing the claim (whether as to the amount of any sum payable, or as to whether anything at all is payable)’;
  • if it can do so, then ‘the conduct of the insurer in handling the claim may be a relevant factor in deciding whether the term was breached and, if so, when.[21]

The Law Commission’s intention was to protect the ability of insurers to take a robust approach to decision-making where they suspect fraud or non-compliance with policy terms or where the precise circumstances of the loss were not clear, and to catch bad claims-handling practices, not prevent legitimate investigations by insurers.[22] They therefore suggest that ‘something more’ must be shown before an insurer which makes a reasonable but ultimately wrong refusal to pay a claim may be found to have breached the implied term, and give the examples of:

  • an insurer which conducts its investigation unreasonably slowly, or is slow to change its position when further information confirming the validity of the claim comes to light;[23] or
  • as examples of a deliberate or reckless breach, where claims handlers delay or reject a claim they know to be valid in order to secure a bonus payment or with a view to any internal budgets or quotas, or an insurer’s approach to a claim is blameworthy to the point of recklessness.[24]

Attempts to introduce into the House of Lords a right to allow insurers to rely on legal advice about a dispute in this context without waiving privilege in that advice were unsuccessful. This plainly has implications for the way in which insurers and their lawyers record legal advice and decisions made in the context of handling claims for policies issued/variations made from 4 May 2017 onwards. It would be prudent for the facts on which claims handling decisions are based, and the rationale for those decisions, to be recorded separately from the substance of legal advice, so that the former can be disclosed and relied on if a claim is made for late payment without having to choose between waiving privilege in legal advice, or being unable properly to defend a claim for late payment.

Delay in rejecting invalid claim does not give rise to right to damages

The implied term applies only in respect of ‘sums due’ in respect of a claim. This means that a delay in rejecting a claim which is later held to be invalid does not give rise to a right to damages for breach of the implied term.

The remedies for breach

As this is a term implied into the contract of insurance by statute, the usual remedies for breach of a contractual term are available, including damages and injunctive relief, and that the usual rules as to remoteness, foreseeability and mitigation of loss will apply to a claim for damages. The basic position in relation to foreseeability, in the words of the Law Commission, is that ‘Insurers are aware that policyholders rely on insurance monies in times of crisis’.[25]

Limitation period

In accordance with its usual approach, the Law Commission was proposing not to make any specific provision in relation to limitation but to allow limitation to follow the general law.[26] This would have been the six-year limited period for actions founded on simple contract.[27] However, a specific limitation period was later added by amendment in the House of Lords. This provides a one-year time limit for an action for breach of the implied term starting on the date on which the insurer has paid all the sums due in respect of the claim.[28] Two different limitation periods will therefore usually be in play if a claim is made both for an indemnity under a policy of insurance and for damages for late payment.

Contracting out of the implied term

The parties may not contract out of the statutory implied term in consumer insurance.[29] In non-consumer insurance[30], the parties may contract out of the implied term except where the breach is deliberate or reckless (‘did not care’).[31] Importantly, these restrictions do not apply to settlement agreements.[32]

This means that where contracting out is permitted (ie in non-consumer insurance unless the breach is deliberate or reckless), a contractual limitation on liability may be imposed, for example capping the amount or type of damages which may be recoverable.

Lawyers acting for insurers will need to consider whether they should advise insurers to enter into contractually binding settlement agreements which include an express term in relation to any entitlement to make a claim for late payment, or at least provide for full and final settlement of the insurer’s liability so as to start time running for any claim for late payment.

Where the beneficiary is not an insured

The obligation to pay claims within a reasonable term applies only to ‘the insured’ making ‘a claim under the contract’, and where a contract has been entered into, ‘the insured’ is defined as ‘the party to a contract of insurance who is the insured under the contract[33]. The right to damages for late payment therefore applies only in respect of claims made by a party to the contract, and unlike in respect of fraudulent claims and contracting out, no special provision is made for late payment of claims under group policies which provide cover for persons who are not parties to the contract.

Impact of the reform

The Law Commission thought that successful late payment claims would be relatively rare, and the impact on insurers correspondingly limited.[34] The reform will have a significant impact for policyholders like Mr Sprung for whom something goes badly wrong and who will no longer be left without a remedy. The Law Commission may be right that successful late payment claims prove to be relatively rare. The wider impact of the reform is however likely to be significant. There is potential for disruption if claims management companies move into this area, and the Association of British Insurers, which supported the reform, did so despite its concern that this might happen.[35] These fears may turn out to be unfounded.

But the right to damages is likely to have a significant impact on the way in which insurers investigate and make decisions about claims. The need to record the rationale for decisions will prompt consideration at an earlier stage as to whether liability should be admitted, or part of a claim paid, while investigations of quantum or other elements are ongoing. There may also be an increased level of formality in claims handling, with insurers writing to insureds setting out in more detail the facts on which they are basing a decision, and inviting the insured to correct those facts if they think they are wrong. Insurers may also make increased use of Part 36 offers, or at least put their position formally in writing, so as to avoid any dispute as to what they offered to pay the insured at what stage, and on what terms. Where insurers confirm liability at an earlier stage, while continuing to investigate quantum, insureds will be in a stronger bargaining position when it comes to agreeing the quantum of the claim.

  1. The Alexandros T [2012] EWCA Civ 1714, [2013] 1 Lloyd’s Rep 217, para 1.
  2. The Alexandros T [2013] UKSC 70, [2014] 1 Lloyd’s Rep 223, para 6.
  3. [1999] Lloyd’s Rep IR 111, CA (decided in 1996 but not reported until three years later); see Evans LJ at 118.
  4. Pride Valley Foods Ltd v Independent Insurance Co Ltd [1999] Lloyd’s Rep IR 120.
  5. In Mandrake v Countrywide Assured Group plc [2005] EWCA Civ 840, at para 25.
  6. In ‘Should Sprung lose its spring?’, the Twelfth Annual Peter Taylor Memorial Address given to the Professional Negligence Bar Association on 21 April 2009. Richard Liddell of 4 New Square assisted Rix LJ in the preparation of this lecture.
  7. [2007] UKHL 34, [2008] 1 AC 561.
  8. See Banque Financière de la Cité SA v Westgate Insurance Co Ltd [1991] 2 AC 249, HL; Manifest Shipping Co Ltd v Uni-Polaris Insurance Co Ltd, The ‘Star Sea’ [2001] UKHL 1, [2003] AC 469. The Law Commission considered introducing a right to damages for breach of the duty of good faith as an alternative to the new implied term, but was persuaded by insurers that this might lead to the development of US-style bad faith claims, and that this would be undesirable: see the Report, paras 26.60-26.63.
  9. [1997] LRLR 94, 136-137.
  10. It would also have been contrary to an express term in the relevant policies.
  11. ICOBS 8.1.1 imposes obligations on insurers in relation to claims handling, including an obligation to handle claims promptly and fairly.
  12. Section 138D (prior to 1 April 2013, s 150) of the Financial Service and Markets Act 2000 provides that contravention by an authorised person of a rule made by the Financial Conduct Authority (‘FCA’) is actionable at the suit of a private person who suffers loss as a result of the contravention, subject to the defences and other incidents applying to actions for breach of statutory duty. This ‘can perhaps be described as an express cause of action for breach of statutory duty’: Green v Royal Bank of Scotland plc [2013] EWCA Civ 1197, para 28 (Tomlinson LJ). The rules made by the FCA include ICOBS.
  13. See s 138D(6) of FSMA and Regulation 3(1)(a) of the Financial Services and Markets Act 2000 (Rights of Action) Regulations 2001, reg 3(1). This exception has been construed widely: see Titan Steel Wheels Ltd v Royal Bank of Scotland plc [2010] EWHC 211 (Comm), [2010] 2 Lloyd’s Rep 92, paras 48 and 70 (David Steel J); applied in a series of subsequent cases including Thornbridge Ltd v Barclays Bank plc [2015] EWHC 3430 (QB) (appeal to Court of Appeal pending).
  14. See s 44(3) of the Enterprise Act 2016.
  15. See s 28(2) of the Enterprise Act 2016, which inserts a new s 22(3A) into the Insurance Act 2015.
  16. Section 13A(2) of the Insurance Act 2015.
  17. See s 13A(3) of the Insurance Act 2015.
  18. At para 28.32. The wording of s 13A is identical to the wording of clause 14 in the Law Commission’s draft Bill and therefore the subject of its July 2014 Report.
  19. See the July 2014 Report at para 28.38.
  20. If the insurer shows that there were reasonable grounds…’: s 13A(4).
  21. Section 13A(4), Insurance Act 2015.
  22. Report, para 27.6.
  23. See the July 2014 Report, paras 28.50-28.52.
  24. See the July 2014 Report, para 28.98.
  25. Report, para 26.39.
  26. Report, para 28.71-28.76.
  27. Section 5, Limitation Act 1980.
  28. Section 5A(1), Insurance Act 2015.
  29. Section 16A(1), Insurance Act 2015. For the purposes of the Insurance Act 2015, ‘consumer insurance contract’ means ‘a contract of insurance between (a) an individual who enters into the contract wholly or mainly for purposes unrelated to the individual’s trade, business or profession, and (b) a person who carries on the business of insurance and who becomes a party to the contract by way of that business…’: see s 1 of the Consumer Insurance (Disclosure and Representations) Act 2012 and s 1 of the Insurance Act 2015.
  30. A contract of non-consumer insurance means ‘a contract of insurance that is not a consumer insurance contract’: see s 1 of the Insurance Act 2015.
  31. Section 16A(2) and (3), Insurance Act 2015.
  32. Section 16A(6), Insurance Act 2015.
  33. Section 1, Insurance Act 2015.
  34. Report, para 26.33.
  35. See the transcript of the evidence of Ms Philippa Handyside of the Association of British Insurers to the House of Lords Special Public Bill Committee on 3 December 2014, at page 20.

Be prepared? – the perils of witness training

In two recent cases, one in the Commercial Court and one in the Technology and Construction Court, judges have deprecated the use of witness preparation even where the training falls short of witness coaching.

Witness coaching is prohibited by the Bar Code of Conduct[1], which states that ‘Your duty to act with honesty and integrity under CD3 includes the following requirements… you must not rehearse, practise with or coach a witness in respect of their evidence[2]. CD3, one of the Core Duties imposed on barristers by the Code of Conduct, is that: ‘You must act with honesty and integrity’.

Coaching’ is not defined in the Code of Conduct, but the Bar Council practice note on Witness Preparation[3] says:

In any discussions with witnesses regarding the process of giving evidence, great care must be taken not to do or say anything which could be interpreted as suggesting what the witness should say, or how he or she should express himself or herself in the witness box: that would be coaching.[4]

This Bar Council practice note draws heavily on the 2005 decision of the Court of Appeal in R v Momodou[5] and states[6] that there is currently no authority on these matters in relation to civil proceedings, and that until such authority emerges, it would be prudent to proceed on the basis that the general principles set out in R v Momodou also apply to civil proceedings.

In R v Momodou, the Court of Appeal made clear that discussion with a witness of his or her proposed or intended evidence in a criminal case was not permitted:

Training or coaching for witnesses in criminal proceedings (whether for prosecution or defence) is not permitted. This is the logical consequence of [the] well-known principle that discussions between witnesses should not take place, and that the statements and proofs of one witness should not be disclosed to any other witness. … The witness should give his or her own evidence, so far as practicable uninfluenced by what anyone else has said, whether in formal discussions or informal conversations. The rule reduces, indeed hopefully avoids any possibility, that one witness may tailor his evidence in the light of what anyone else said, and equally, avoids any unfounded perception that he may have done so. These risks are inherent in witness training.[7]

The Court of Appeal said that there was a ‘dramatic distinction’ between witness training or coaching, and witness familiarisation.[8] Witness familiarisation is:

pre-trial arrangements to familiarise witness with the layout of the court, the likely sequence of events when the witness is giving evidence, and a balanced appraisal of the different responsibilities of the various participants’,[9]

and the Court of Appeal added that such arrangements would usually be in the form of a pre-trial visit to the court, and were generally to be welcomed, but that out of court familiarisation techniques were also permissible. It emphasised, however that ‘None of this … involves discussions about proposed or intended evidence’.[10]

The Court of Appeal also addressed specifically the position of expert witnesses, saying that training of such witnesses in ‘the technique of giving comprehensive evidence of a specialist kind to a jury, both during evidence-in-chief and in cross-examination, and, another example, developing the ability to resist the inevitable pressure of going further in evidence than matters covered by the witnesses’ specific expertise’. As with witnesses of fact, ‘The critical feature of training of this kind is that it should not be arranged in the context of nor related to any forthcoming trial, and it can therefore have no impact whatever on it.’[11]

Guidance in the Bar Code of Conduct in a related but different context (the duty not to mislead the court) refers to the preparation of witness statements, and states that:

you are entitled and it may often be appropriate to draw to the witness’s attention other evidence which appears to conflict with what the witness is saying and you are entitled to indicate that a court may find a particular piece of evidence difficult to accept. But if the witness maintains that the evidence is true, it should be recorded in the witness statement and you will not be misleading the court if you call the witness to confirm their witness statement.’[12]

The reference to witness statements makes clear that this guidance relates to civil rather than criminal proceedings. It is not addressed in the Bar Council practice note, which as we have seen indicates that, in the absence of authority, it would be prudent to proceed on the basis that the general principles set out in R v Momodou also apply to civil proceedings. There is therefore an inconsistency between the Code of Conduct guidance and the clear statement in R v Momidou that ‘the statements and proofs of one witness should not be disclosed to any other witness’. This inconsistency is not explicable by the difference in procedure, as witness statements in civil proceedings simply take the place of oral evidence in chief: the process of taking the statement is merely the mechanism by which the evidence is put before the court, and there is no difference of principle. The extent to which the practice referred to in the Code of Conduct guidance will be regarded by the civil courts as permissible has yet to be determined, but there is no doubt that, given the clear statement in the guidance, it is acceptable from a regulatory perspective as far as barristers are concerned.

This is the legal and regulatory background against which judges in two recent commercial cases have deprecated the use of witness preparation even where such training falls short of witness coaching. Flaux J said in the Commercial Court in Republic of Djibouti v Boreh:[13]

The second reason for approaching the evidence of the Djibouti witnesses with considerable caution is that it was quite obvious that they had had witness training and been carefully prepared for giving evidence. Mr Douale admitted as much.[14]

And:

Whilst I am not suggesting that witness training in itself is improper, (provided that it does not amount to coaching of a witness as to what to say, which would be improper) it is to be discouraged, since, as this case demonstrates, it tends to reflect badly on the witness who, perhaps through no fault of his or her own, may appear evasive because he or she has been “trained” to give evidence in a particular way.’[15]

Last month, in Harlequin Property (SVG) Ltd v Wilkins Kennedy[16] in the Technology and Construction Court, Coulson J referred to Flaux J’s remarks with approval:

I was unsurprised to learn that Mr MacDonald had had witness training. For the same reasons outlined by Flaux J (as he then was) in Republic of Djibouti v Boreh … I consider it to be a practice “to be discouraged since…it tends to reflect badly on the witnesses who…may appear evasive.” In my view, the training he received exacerbated Mr MacDonald’s natural tendency to avoid answering any difficult question.’[17]

We can expect commercial judges to continue to criticise attempts to refine the evidence which is to be given by witnesses in court. Judges want, so far as possible, to hear a witness’s evidence in his or her own words. The 2007 Report of the Commercial Court Long Trials Working Party, in which two Commercial Court judges[18] were heavily involved, said:

Inevitably, in nearly all cases the witness statements are drafted by the lawyers, although based on interviews with the witness. But this process often leads to the statements being in lawyers’ language rather than the words of the witness. Also, all too frequently the statements spend far too long summarising documents that a party wishes to have in evidence and arguing the case. Not enough time is spent recording the witness’s actual memories of relevant events.[19]

The Admiralty and Commercial Courts guide[20] similarly emphasises that the function of a witness statement is to set out in writing the evidence in chief of the witness and that as far as possible, therefore, the statement should be in the witness’s own words; that it should not contain lengthy quotations from documents; and that it should not engage in argument.[21]

  1. The Code of Conduct is in Part 2 of the BSB Handbook (2nd Edition, April 2015, updated December 2016).
  2. Rule rC9.4. There is no specific prohibition in the solicitors’ Code of Conduct (Version 18, published 1 November 2016): see Chapter 5, ‘Your client and the court’, including IB(5.9) to IB(5.11); and see this interesting article by Professor Richard Moorhead in the Guardian in relation to David Cameron’s preparation for his appearance before the Leveson inquiry in 2012.
  3. Issued October 2005; last reviewed May 2016. Practice notes issued by the Bar Council do not constitute ‘guidance’ for the purposes of the Code of Conduct: see further paragraph I6.4 of the Handbook (pages 11-12 of the pdf version).
  4. At para 17.2.
  5. [2005] EWCA Crim 177.
  6. At para 16.
  7. At para 61.
  8. At para 61.
  9. At para 62.
  10. At para 62.
  11. At para 62.
  12. Code of Conduct, para gC7.
  13. [2016] EWHC 405 (Comm).
  14. At para 65.
  15. At para 67.
  16. [2016] EWHC 3188 (TCC).
  17. At para 18.
  18. Aikens and Gloster JJ; Aikens J chaired the working party which prepared the report; I was its secretary.
  19. At para 69.
  20. Last updated 18 March 2016.
  21. See paras H1.1(i), (iii) and (v)),

Won’t you stay? – prejudice arising from concurrent civil and criminal proceedings

Civil courts are sometimes asked to stay their proceedings in order to avoid prejudice to a party who is facing concurrent criminal proceedings, for example where there is a factual overlap concerning allegations of dishonesty or fraud. The courts are slow to grant a stay, and will always try to resolve the issue by case management measures short of a stay; but they will stay proceedings, in the exercise of their discretion, in an appropriate case.

The starting point is s 49(3) of the Senior Courts Act 1981, which provides:

Nothing in this Act shall affect the power of the Court of Appeal or the High Court to stay any proceedings before it, where it thinks fit to do so, either of its own motion or on the application of any person, whether or not a party to the proceedings.

CPR 3.1(2)(f) provides that the court may, unless the rules provide otherwise, ‘stay the whole or part of any proceedings or judgment either generally or until a specified date or event’.

The party seeking to stay civil proceedings where there are concurrent criminal proceedings is typically the defendant in both sets of proceedings, although as two recent decisions illustrate, this is not always the case.

In Bittar v The Financial Conduct Authority[1], the Financial Conduct Authority, supported by the Serious Fraud Office (‘SFO’), which was the prosecutor in concurrent criminal proceedings, sought a stay of its reference to the Upper Tax Tribunal (Tax and Chancery Chambers – Financial Services) pending resolution of the SFO’s criminal proceedings in respect of a charge of conspiracy to defraud. The SFO’s objections included that the defendant might seek to introduce evidence given or findings made by the Tribunal into the criminal proceedings, and said that it, too, was entitled to a fair trial.

The Tribunal said that there was a strong presumption against a stay and that it was a power which had to be exercised with great care and ‘only where there is a test of real risk of serious prejudice which may lead to injustice[2]. It declined to order a stay, partly on the grounds that any prejudice could be mitigated by case management measures including, if necessary, deferring the hearing of the reference itself until after the criminal proceedings had concluded.[3] In the meantime, the Tribunal gave directions for the parties to prepare for the hearing, and said that the matter should be kept under review.[4]

In Polonskiy v Alexander Dobrovinsky & Partners LLP,[5] the claimant asked the High Court to stay civil proceedings which he himself had brought, and to stay a counterclaim brought by a defendant, pending the resolution of criminal proceedings against him in Russia. He relied on an alleged risk of injustice to him not in the criminal proceedings, but in the civil proceedings. This was an unpromising start and, although the court considered the matter in detail (in a judgment which was 153 paragraphs long), it ultimately declined to grant a stay. The defendant in the civil proceedings tried unsuccessfully to persuade the court that the test to be applied was that a stay should be granted only in ‘rare and compelling circumstances’,[6] which is the test usually applied where the court is being asked to stay civil proceedings in favour of other civil (court or arbitral) proceedings.[7] The court rejected this submission and instead applied the principle, derived from earlier decisions of the Court of Appeal, that the court has a discretion to stay civil proceedings until related criminal proceedings have been determined, but that this is ‘a power which has to be exercised with great care and only where there is a real risk of serious prejudice which may lead to injustice’.[8]

  1. [2016] UKUT 265 (TCC).
  2. At para 16.
  3. See para 17.
  4. See para 17.
  5. [2016] EWHC 1114 (Ch) (Mr G Moss QC, sitting as a deputy judge of the High Court).
  6. See paras 135-139.
  7. See eg Reichhold Norway ASA v Goldman Sachs International (a firm) [2000] 1 WLR 173, CA, 186 (Bingham LJ).
  8. See paras 133 and 139; the quotation is from R v Panel on Takeovers and Mergers, ex p Fayed [1992] BCC 524, CA, 531 (Neill LJ); approved: Attorney-General of Zambia v Meer Care & Desai (a firm) [2006] EWCA Civ 390, para 36 (Sir Anthony Clarke MR).

Insurance law – taking stock of the changes

Last week I moved chambers – to 4 New Square – and the fourth edition of my book, Insurance Claims, was published by Bloomsbury Professional. This blog post has been delayed while I have been busy elsewhere, but is perhaps none the worse for that, as now seems to be a good time to take stock of recent and forthcoming changes in insurance law. The Third Parties (Rights Against Insurers) Act 2010 finally comes into force on 1 August 2016, the main provisions of the Insurance Act 2015 come into force on 12 August 2016, and there have been a number of important insurance cases in the Court of Appeal and Supreme Court in recent months. So, let’s take stock.

First, the statutory reforms on the immediate horizon:

  • The Third Parties (Rights Against Insurers) Act 2010 comes into force on 1 August 2016. I have written previously about the slow journey of this reform[1]. The 2010 Act has been amended in important respects since it received royal assent, so make sure you refer to the latest version[2]. Remember, too, that the Third Parties (Rights Against Insurers) Act 1930 is repealed by the 2010 Act[3], but that notwithstanding its repeal it continues to apply to some claims[4].
  • The main provisions of the Insurance Act 2015 come into force on 12 August 2016. With the exception of the provisions about remedies for late payment which were inserted by the Enterprise Act 2016 (see below), the Insurance Act 2015 applies to contracts of insurance made from 12 August 2016 – so, the new duty of fair presentation, the new rules which apply to warranties and terms not relevant to the actual loss, and the new provisions in relation to fraudulent claims all apply to contracts of insurance made from this date[5]. There is some important detail in relation to contractual variations: the duty of fair presentation applies to variations agreed from 12 August 2016 to contracts of insurance entered into at any time[6], while the new rules in relation to warranties and terms not relevant to the actual loss and the new provisions in relation to fraudulent claims apply only to variations agreed from 12 August 2016 to contracts of insurance entered into from this date[7].

Next, the recent cases:

  • AIG Europe Ltd v OC320301 LLP[8], a decision of the Court of Appeal in April 2016 on the construction of the aggregation wording in the minimum terms and conditions of professional indemnity insurance for solicitors. The Court of Appeal remitted the case to the Commercial Court for re-trial in accordance with the guidance given in its judgment, so there is more to come.
  • Versloot Dredging BV v HDI Gerling Industrie Versicherung AG[9], a decision of the Supreme Court in July 2016 on ‘fraudulent devices’. The Supreme Court rejected the reasoning of the Court of Appeal in Agapitos v Agnew[10] which had been applied since 2002, and decided that the fraudulent claims rule did not apply to justified claims supported by collateral lies (usually known as ‘fraudulent devices’, although the Supreme Court did not like this term). This is the end of the road for this litigation, but the ramifications of the decision of the Supreme Court will be worked out in future cases. Expect a period of uncertainty while this happens.
  • Hayward v Zurich Insurance Company plc[11], which is not an insurance case but a decision of the Supreme Court in July 2016 which affects insurers, as it considers the test for setting aside a settlement for fraud. Insurers suspected fraud at the date of settlement but could not prove it until later, and the Supreme Court decided that the settlement could be set aside.

And finally, looking to the future:

  • Impact Funding Solutions Ltd v Barrington Support Services Ltd was argued in the Supreme Court on 30 June 2016. Term ended last Friday, and judgment is likely to be given next term, which starts on 3 October 2016. In the meantime, the argument in the Supreme Court can be viewed here, and the judgment of the Court of Appeal[12] can be read here. The case involves the construction of the debts and trading liabilities exclusion in the minimum terms and conditions of professional indemnity insurance for solicitors. It will be particularly significant for solicitors and their insurers, but the judgment may also be relevant to the construction of similar exclusions in other professional indemnity policies.
  • The provisions of the Insurance Act 2015 in relation to remedies for late payment of insurance claims which were inserted by the Enterprise Act 2016[13] will come into force in relation to contracts of insurance entered into from 4 May 2017[14]. In the meantime, the under-used right to damages for late payment of insurance claims which already exists for ‘private persons’ under ICOBS (the Insurance Conduct of Business Sourcebook) and the Financial Services and Markets Act 2000 continues to apply.

© Alison Padfield

[1] I said in my earlier blog post that I was hoping that the Act would come into force before the fourth edition of my book was published; that did not happen (it was a close-run thing: the book beat the Act by a few days), but happily the 2010 Act as finally amended was available in time to be written up in the book.

[2] As amended by both the Insurance Act 2015 and the Third Parties (Rights Against Insurers) Regulations 2016.

[3] See s 20(3) and Sch 4.

[4] See s 20(2) and Sch 3.

[5] See s 22(1)-(3) and 23(2).

[6] See s 22(1)(b) and (3) and 23(2).

[7] See s 22(2) and (3) and 23(2).

[8] [2016] EWCA Civ 367.

[9] [2016] UKSC 45.

[10] [2002] EWCA Civ 247.

[11] [2016] UKSC 48.

[12] [2015] EWCA Civ 31.

[13] Part 4A, Late Payment of Claims.

[14] Section 22(3A), Insurance Act 2015 and s 44(3), Enterprise Act 2016.

Damages for late payment of insurance claims – Enterprise Act receives royal assent

The Enterprise Act 2016 received royal assent on 4 May 2016.  From 4 May 2017, a term will be implied by statute into new policies of insurance, and variations to those policies, that if the insured makes a claim under the policy, the insurer must pay any sums due within a reasonable time.  This means that, for the first time, there will be a general right to damages for late payment of insurance claims.

I will write more in future blog posts about this new right, about why legislation was required to introduce it, and about the under-used right to damages for late payment of insurance claims which already exists for ‘private persons’ under the Financial Services and Markets Act 2000 and ICOBS (the Insurance Conduct of Business Sourcebook).

“Unbundled” legal services – bridging the funding gap?

Recent reforms have made it harder to obtain legal advice and representation on a conditional fee basis. Coupled with cuts to legal aid, this means that instructing a solicitor on a traditional retainer is out of reach for many people. As a result, it is becoming increasingly common for solicitors to provide their services on an “unbundled” basis as and when a litigant can afford to pay for them, and for barristers to provide their services direct to members of the public without an instructing solicitor (officially called “public access”, but more often referred to as “direct access”).

I recently wrote an article with Sophie Belgrove on Minkin v Lesley Landsberg,[1] a case in which the Court of Appeal considered the extent of a solicitor’s duties when instructed by a wife to draft a consent order following divorce. The Court of Appeal concluded that the solicitor did not owe the wife a duty to advise her as to the substance of the divorce settlement which she had agreed with her husband. King LJ referred expressly to legal aid no longer being available in financial remedy cases, “no matter the level of hardship caused to the protagonists or the complexity of the proceedings”, to the need for complex orders to be drawn up for the court’s approval, and to the importance to the courts and to litigants in these circumstances of solicitors being able to provide unbundled legal services without being held to have taken on much wider advisory duties. (First published in the New Law Journal, the article is reproduced in full here by kind permission of the NLJ and its editors, Jan Miller and Danielle Monroe: Solicitors’ negligence – Unbundling unshackled – Belgrove & Padfield.)

Unbundled legal services can help bridge the funding gap, but they are not a complete solution. There will always be some litigants or would-be litigants who will be unable to conduct litigation without the assistance of a solicitor. And even for those who do so, there is a risk that important steps which would be taken if a solicitor had conduct of a matter from start to finish on a traditional retainer will be missed and, consequently, that the litigant’s interests may be prejudiced. This is illustrated by Okon v London Borough of Lewisham,[2] a case which has recently caught the eye of legal commentators and journalists. In a complex bankruptcy appeal involving liability for council tax, the applicant was not advised that she should appeal against a particular order, and she did not do so. The deputy High Court judge noted that the applicant “was represented at hearings on an ad hoc basis by relatively junior albeit able Counsel on a direct access basis,” but as he observed, “that is not a complete substitute for being represented by experienced solicitors in a matter such as this”.[3]

  1. [2015] EWCA Civ 1152.
  2. [2016] EWHC 864 (Ch).
  3. At para 26(ii).