June 2015
Welcome to the Weightmans’ Professional Risk and London Market team’s new
newsletter, featuring reviews of key cases of the month. This edition marks
our forthcoming move to new offices in EC3, the heart of the insurance
market. We will be opening at Exchequer Court on St Mary Axe during this
summer.
Professional Negligence - solicitors
Joanne Chinnock v Veale Wasbrough & Karen Rea, 1 March 2015, Court of Appeal
In April 1998 Ms Chinnock gave birth to a baby daughter who had severe abnormalities. She sought legal advice as to whether she had a claim against the NHS Trust for wrongful birth. In July 2001, after considering the medical records and expert advice, her solicitors and counsel advised that she did not have sufficient prospects of success in a claim against the NHS Trust and her legal aid certificate lapsed. She did not commence proceedings.
In 2009, Ms Chinnock received different advice from new solicitors. In July 2010 she commenced proceedings against her former solicitor and in January 2012 a separate action against her former counsel. The High Court dismissed Ms
Chinnock’s claim, holding that it was statute barred and also that there had not been a breach of duty as the lawyers had given competent advice on the evidence.
Ms Chinnock’s appeal to the Court of Appeal was dismissed on the basis of no breach of duty and because she had constructive knowledge of the facts required to bring an action, her claim was out of time. The case is potentially
important and useful in defending claims where the claimant has allowed a long time to elapse before taking proceedings against former advisers but then receives advice which conflicts with that of the original adviser.
Watson Farley & Williams (A Firm) v Itzhak Ostrovizky, 12 May 2015, Court of Appeal
This is a useful reiteration of the approach of the Court of Appeal (“CA”) when it is asked to look at findings of fact made in a professional negligence case. The claim was dismissed after a 10 day trial before Silber J in November 2013 at the end of which the judge found for Watson Farley (“WF”) on all issues. WF had sued for £25,000 in fees and Mr Ostrovisky had counterclaimed for £13m.
O had invested in solar energy projects in Greece using WF to draft the agreements. The projects failed. O alleged that there was insufficient protection for him in terms of the control he could exercise over the other party in relation to licence.
The judge at first instance held that the solicitor had not been negligent as she had advised O to take a small shareholding in the company but in any event the solicitor’s remit was to incorporate the structure within a contract. Further, even if the advice which the appellant alleged should have been given had been given, he would not have followed it and he would, in any event, have behaved in such a way that he would have suffered losses no matter what the agreement said because his partner was not willing to put the funds into the project. O had made a commercial decision that he would put the money in – which he ended up losing. He became in effect the financing party.
The judge found O and his partner to be untrustworthy and the solicitor from WF to be wholly reliable and honest. The judge found no causal link in any event. Causation was down to the commercial choice of partner and not any aspects of
the drafting of the agreement. O’s partner was impecunious and dishonest and the financial climate changing in 2007 was another causative factor.
Michael Pooles QC for O said openly that there was no point of law in the appeal but he sought to persuade the CA that the judge’s findings of fact should be overturned. The court held that O had fallen far short of establishing that the judge’s findings of fact were not open to him and an appellate court should not interfere unless it was satisfied that the trial judge’s conclusions on primary facts were plainly wrong. Various recent authorities were cited reminding the court of the requirement to follow that approach. The CA said that the submissions of Mr Pooles resembled a closing speech to a trial judge.
The case is also useful on the approach to be adopted where the real cause of loss is a bad commercial decision rather than legal drafting or advice.
Insurance
Zurich Insurance Plc UK v International Energy Group, 20 May 2015, Supreme Court
Zurich (“Z”) appealed against a decision concerning the extent of its liability to indemnify International Energy Group (IEG) in respect of damages and costs payable to an employee, a Mr Carré who had died of mesothelioma. He issued
proceedings before his death and his claim was settled by IEG on the basis they had breached their duties to him over the whole of the 27 years of his period of employment. IEG sought an indemnity from Z who had insured for 6 of those years. The Court of Appeal found for IEG. The Supreme Court (“SC”) held that the common law position applied, not the statutory provisions of the Compensation Act. The SC by a majority also held that Z had an equitable right of recoupment against IEG and any other insurers in respect of the years when Z was not on risk, a concept which the SC stressed was strictly confined to situations falling within the special rule.
Diminution in value
Raymond v Young, 14 May 2015, Court of Appeal
This is an interesting case on diminution in value arising from nuisance. Young (“Y”) appealed against a decision awarding damages in favour of Raymond (“R”) (their neighbours) for diminution of the value of R’s property caused by nuisance. R owned a farmhouse, used as a holiday home, which had originally belonged to the father of Y. Y had been responsible for continuous acts of harassment, trespass and nuisance against R over a period of many years.
In the original ruling a permanent injunction to prevent further nuisance was made, and a composite award of £20,000 for distress and loss of amenity. Y’s actions were also found to have caused a diminution in the value of the farm of 20 per cent, amounting to £155,000. Y appealed on the grounds that the judge was wrong to have made an award for diminution in value, because the injunction was sufficient to prevent any future acts of nuisance.
The appeal was allowed in part. The benefit of the injunction was personal to the respondents and, on a sale, the protection it afforded would end. Any repetition of the same sort of conduct towards the incoming purchaser would necessitate fresh proceedings for an injunction. The judge was therefore entitled to make an award of £155,000 for diminution in value calculated on the basis that the threat of a nuisance to a future purchaser would continue. However, the award of damages of £20,000 for loss of amenity along with the full measure of capital loss amounted to double recovery.
It was not appropriate to make separate awards of damages for distress in cases of nuisance. The damages were therefore reduced by £20,000 to eliminate double recovery.
Malicious prosecution in civil proceedings
Peter Willers v Albert Gubay, 15 May 2015, Chancery Division
Mr Willers (“W”) issued proceedings against his former employer Mr Gubay (“G”), a successful businessman, claiming damages for the tort of malicious prosecution of civil proceedings and interest thereon. W contended that G maliciously caused proceedings for negligence and breach of fiduciary duty to be brought against him, in circumstances where G knew that the claim was false because he was the author of the acts complained of within those proceedings.
G applied to strike out the claim. The issue on this application was whether the tort of malicious prosecution of civil proceedings is known to English law.
This case provides a useful commentary on the tort of malicious prosecution. Ultimately, the judge decided that the claim for malicious prosecution of civil proceedings should be struck out, because the court was bound by Gregory v Portsmouth City Council [2000] 1 AC 419, HL, and in accordance with the doctrine of precedent could not follow the alternative
argument - see: Crawford Adjusters (Cayman) Ltd v Sagicor General Insurance (Cayman) Ltd [2014] AC 366, PC.
Costs
Network Rail v Simon Handy, 20 May 2015, QBD
This is a case on the awarding of indemnity costs. When a party wins and the other side’s evidence or the basis of its case is seriously undermined the successful party often wants to be vindicated in terms of costs. This case is also another warning about the quality of expert evidence.
Network Rail (“NR”) won various cases against insured drivers who had caused damage to NR property and the drivers had to pay the costs. The drivers relied on evidence from an expert which was not accepted and who made concessions in cross examination. The court rejected NR’s application for indemnity costs and referred to the test for the same being that the conduct was so far outside the normal run of things that it could be considered unreasonable to a high degree. The fact that a key witness had done badly was not grounds for awarding indemnity costs unless it was clear that a party, or the expert, was deliberately or recklessly trying to mislead the court. That was not the instant case where the drivers had put forward arguable evidence on a bona fide basis. A firm judgment in moderately robust terms was not enough to lead to an award of indemnity costs. In the judgment on the issues in the case the judge had found that the expert for NR was head and shoulders above the expert for the drivers, the latter having admitted that he was on a learning curve and nowhere near as experienced as his opponent.
Halborg v EMW Law 22 May 2015 Chancery Division
This is a short but useful case on costs. The judge found that the defendant LLP was not a litigant in person for the purpose of CPR 46.5 and so could claim fees on a full basis when the firm acted for itself. This point sometimes arises in the context of firms suing for their fees and then facing counterclaims. The judge likened the situation to a company with an in-house lawyer recovering at a full rate.
Experts
EXP v Charles Simon Barker 7 May 2015 EWHC
This was a clinical negligence case but contains another stark reminder and warning as to the position of an expert who has a conflict of interest. The medical expert for Barker (“B”), a Dr Molyneaux (“Dr M”), had, it emerged on cross
examination, had a lengthy and extensive connection (writing papers together, training and mentoring, same committees) with B when they were both at the same hospital.
Counsel for B said it did not affect Dr M’s impartiality but the court rejected that submission. The court described the situation as chaotic with the extent of the connection only being revealed in cross examination. The court was concerned about the independence of Dr M in the case, and while it declined to rule that the evidence was inadmissible, it did say that its value was severely affected by these matters. The claimant won on liability.
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