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From: LawAssist <mfranklin@lawassist.co.uk>
To: Andrew Cawkwell
Sent: Wed Jun 30 10:26:06 2010
Subject: June E News 2010
June E News 2010
Something a little different this month as we take a look at how a court might approach an allegation of a fraudulent claim on an insurance policy, with a useful illustration of how a court proceeds where there is no persuasive explanation of what happened.
On more traditional lines we have another example of relief from sanctions where form N251 requirements were not met. Yet more on Part 36 and the question of its application to costs assessments and a closer look at Kris Motors (see last month) and taking out ATE late in the day. Finally a brief mention of the proposed new SRA Code.
- Yeganeh v. Zurich Insurance Co - burden of proof decides case
- Tait v Cataldo - Relief from sanction N251
- Harris v Nandos Chickenland - Part 36 on costs assessment
- Kris Motor Spares Ltd v Fox Williams - ATE Policy taken late
- SRA proposed change to Code of Conduct
Using the burden of proof to decide a case - Yeganeh v. Zurich PLC 2010] EWHC 1185 (QB)
This decision in the London Mercantile Court is a good illustration and reminder of how a court might proceed where the evidence before it does not enable a judge to reach a factual conclusion either way. The context was a claim on an insurance policy following a fire. The insurer alleged that the claim was fraudulent. It was therefore for the insurer to prove fraud. Any allegation of fraud in a civil case has to be established under a heavy standard of proof commensurate with the gravity of the allegation. The judge concluded that there were two theories as to what had happened. Accident with a heater on the one hand or arson by the property owner on the other. The judge was unable to accept the likelihood of either explanation.
It was accepted that when presented with more than one possible cause of the fire the law does not permit or require the court simply to choose the one which it considers the more likely. The Popi M [1985] 1WLR 948 was cited where the House of Lords was not able to endorse the reasoning of Mr Sherlock Holmes that "When you have eliminated the impossible, whatever remains, however improbable, it must be the truth".
Lord Brandon in that case said at 955H "A judge is not bound always to make a finding one way or the other with regard to the facts averred by the parties. He has open to him the third alternative of saying that the party on whom the burden of proof lies in relation to any averment made by him has failed to discharge that burden. No judge likes to decide cases on burden of proof if he can legitimately avoid having to do so. There are cases, however, in which, owing to the unsatisfactory state of the evidence or otherwise, deciding on a burden of proof is the only just course for him to take."
On this basis the court concluded that the insurer had failed to make out the allegation of arson (the claim was however in other respects fraudulent and therefore the insurer avoided all liability under the policy.)
Form N251 and relief from sanction - Tait v Cataldo [2010] EWHC 90166 (Costs)
A decision of Master O'Hare in the High Court Costs Office granting relief from sanction in respect of failures to comply fully with the Costs Practice Direction (CPD) requirements as to notice of funding (N251). The claimant's solicitors had in place a CFA, ATE policy, settled particulars of claim and an issued claim form in November 2007. No letter before claim or any other correspondence took place before service in February 2008 to protect the claimant from a risk that the defendant would apply to an Italian court in respect of the claim which concerned property in Italy. The claim was settled but there was then a dispute as to the ATE premium and the success fee. There had been only one Notice of Funding (in February 2008) and it referred only to a CFA in November 2006, no reference to two earlier CFAs or to the ATE policy.
In respect of the ATE policy the failure was an error in transcribing a written N251 into the typed version sent to the defendants. As to the two earlier CFAs those had come to an end by the time the notice had to be given and the solicitor took the view that those earlier CFAs, being spent, did not need to be referred to. That understanding was not however relied upon before Master O'Hare who took the view that counsel was right not to argue that the earlier CFAs need not be referred to.
The explanations given for the mistakes did not count in favour of granting relief but Master O'Hare did grant relief in all respects based on the view that the CFA mistakes were of little significance, the ATE mistake had caused no prejudice to the defendants and the mistakes had in terms of substance been remedied informally before the settlement process commenced.
Does Part 36 apply in costs disputes - Harris v Nandos Chickenland Limited [2009] EWHC 90142 (Costs)
Master O'Hare takes the view in this case that Part 36 offers can be made in costs proceedings even though CPR 47.19 makes specific provision about offers in detailed assessment cases. Having said that however, Master O'Hare observes that Part 36 refers to a trial for the purposes of calculating the 21 day period and detailed assessment proceedings are not a trial. He also observed that CPR 36.14 is headed "Costs consequences following judgment" but that costs assessment decisions would not usually be termed judgments.
Is it unreasonable to take out an ATE policy late in proceedings - Kris Motor Spares Ltd v Fox Williams LLP
We looked at this case in last month's E-News but it is worth a more detailed look at the argument that the insurance was put in place at an unreasonably late stage and for that reason ought not to be recovered.
Solicitors had terminated their CFA because their client had misled them (see E-News Nov/Dec 2009). The client then sought assessment of the solicitor's non CFA based bill. The solicitors took out ATE to cover their adverse costs risk on the assessment at a premium of £90,000. That policy had been arranged only days before trial and was put in place on the first day of trial of a preliminary issue and notice was served on that day also.
It was argued that the solicitors were well able to pay the costs of litigation itself; and the procuring of insurance cover at the latest possible stage, and without prior notice to the claimant, was not consistent with the principles which underlay the Access to Justice Act 1999. The solicitors argued that they had taken the decision that it did not wish to go into a trial entirely self-insured.
Simon J allowed the premium and dismissed the claimant's arguments:
The timing of the Policy may (in some cases) indicate that a contractual premium was an unreasonable cost; but there is no principle that the premium on a late incepting policy is irrecoverable as an unreasonable cost, and each case is likely to depend on its facts. In the present case, it was reasonable for [the defendant] to take the view that it would be imprudent to continue to self insure, particularly in the light of the fact that [the claimant] had instructed Leading Counsel, and the possibility that their chances of success might be reduced and exposure to costs increased. [41]
SRA proposed change to Code of Conduct
The SRA has now published its consultation and a draft handbook on the implementation of what is known as "Outcomes Focused Regulation" (OFR). Out will go the detailed rules that we have at the moment in the Solicitors Code of Conduct. In will come ten far shorter statements of principle and then a list of outcomes. The Handbook will include examples and guidance to show how the outcomes can be achieved and there is no surprise that the examples in the draft handbook are closely based on the existing rules in the Code. The SRA states the view that most solicitors already follow the spirit of the new principles as part of good business practice.
The consultation period closes on 27 July 2010 for OFR and 20 August 2010 for the Handbook - you can respond here:
http://www.sra.org.uk/solicitors/freedom-in-practice/consultations.page
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