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May 2010 Case Law Reports

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KRIS MOTOR SPARES LTD v FOX WILLIAMS LLP (2010)

An after the event insurance policy premium was recoverable as part of a party's costs and there was no basis for concluding that it was not recoverable because the policy was taken out at a late stage in the proceedings. The timing of such a policy might have indicated that a contractual premium was an unreasonable cost, but there was no principle that the premium on a late incepting policy was irrecoverable as an unreasonable cost.

CHURCHILL INSURANCE CO LTD v BENJAMIN WILKINSON (BY HIS FATHER & LITIGATION FRIEND STEVEN WILKINSON) : TRACEY EVANS v EQUITY CLAIMS LTD (2010)

Questions were referred to the Court of Justice of the European Union concerning the compatibility of an insurer's right of recovery under the Road Traffic Act 1988 s.151(8) with Community law.

In conjoined appeals the court was required to determine whether two insurers had a right of recovery against the insured. In one case the insured was a named driver on his mother's insurance policy. He had allowed a friend, whom he knew was uninsured, to drive the car whilst he travelled as a passenger. His friend lost control of the car and collided with another vehicle, and the insured suffered severe injuries. The judge found that by virtue of the Road Traffic Act 1988 s.151(5) that his insurers  were bound to compensate him and were not entitled to reclaim that compensation from him under s.151(8).

However in the other case, another judge reached the opposite conclusion. The insured had allowed a friend to drive her motorcycle whilst she rode on the back as a pillion passenger. She was unaware that he was uninsured and suffered serious injuries as a result of her friend's negligence. She received compensation, but a judge found that her insurers were entitled to reclaim that compensation from her under s.151(8).

In considering both conjoined appeals, the Court held that the effect of s.151(8) as a matter of English law was to exclude from the benefit of insurance a passenger who was the insured but who had given permission to an uninsured driver to drive. However, if s.151(8) was so construed, the question was whether Community law would hold that such an exclusion was void and unenforceable, and whether s.151(8) could be interpreted so as not to breach Community law.

It was therefore appropriate to refer to the Court of Justice of the European Union questions concerning (i) whether s.151(8) in its present form complied with Community law; (ii) whether some amendment or reinterpretation as to the degree of the insured's knowledge was necessary in order for s.151(8) to comply with Community law.

JUSTIN MAYHEW (Claimant) v (1) PHILLIP KING (2) MILBANK TRUCKS LTD (Defendants) & CHAUCER INSURANCE PLC (Third Party): CHAUCER INSURANCE PLC (Part 20 Claimant) v (1) TOWERGATE STAFFORD KNIGHT CO LTD (T/A FOLGATE LONDON MARKET LTD) (2) TOWERGATE PARTNERSHIP LTD (Part 20 Defendants) (2010)

A contract which granted an indemnity to a company, but also provided that the indemnity would cease upon the company's insolvency, offended the principle of anti-deprivation as it deprived the company's administrators of an asset which could have been distributed to creditors.

Chaucer Insurance sought a declaration against the Part 20 defendant to enforce the terms of a settlement agreement made between them. The claimant had brought personal injury proceedings after his car was struck by a lorry belonging to the defendant company. The defendant was insured by Chaucer Insurance, but they declined to cover them on the basis of an exception contained in the policy.

Under the terms of the agreement the Part 20 Defendant was to indemnify the Defendant for sums payable in respect of the personal injury claim. Clause 11 of the agreement also stated that the defendant’s right to an indemnity would cease if it went into administration. Two years after entering into the agreement the defendant went into administration, and the administrators assigned its interest in the settlement agreement to Chaucer Insurance, who were left to conduct the defence in the personal injury action

Chaucer Insurance submitted that clause 11 of the settlement agreement offended the anti-deprivation principle and should be struck down. The part 20 Defendant argued that the contracts should be enforced in accordance with their terms.

It was held that a court would refuse to give effect to provisions in a contract which achieved a distribution of the insolvent's property which ran counter to the principles of insolvency legislation. Chaucer Insurance was therefore entitled to the declarations sought.

ANDREW SWAIN v (1) GEOFFREY OSBORNE LTD (2) PJ BROWN LTD (2010)

The court was required to determine whether the first defendant contractor and the second defendant subcontractor were liable for personal injuries sustained by the claimant lorry driver who slipped near to the site due to a lack of an adequate system being in place to ensure that the area was kept clear of mud.

The main contractor was responsible for work carried out on the building site and a system had been in place to wash the wheels of lorries before they left the site. The sub contractor then assumed full responsibility for ground-works that continued on the site.

The court held that on the evidence, the Claimant’s injuries had been sustained in broadly the way he said. The Claimant had established that he had slipped on a surface that gave rise to an unreasonable risk of slipping, that unreasonable risk having arisen from the failure of the system in place adequately to ensure that the footway was kept clear of mud. That was primarily due to the failure to ensure that wheels were washed before any lorry left the site and then, secondly, to a failure to check the situation effectively. The footway was not in a satisfactory condition on the day of the accident. The main contractor had to bear some measure of responsibility for not ensuring that the sub contractor put in place and implemented a satisfactory system in the post-remediation period. That responsibility derived from the main contractor’s continuing supervisory role. However, the sub contractor had day-to-day responsibility for the works on site and was therefore likely to have to bear the greater proportion of responsibility.

The Claimant’s damages were reduced by 25% as he should have taken more care when walking on a muddy surface.

MARJORIE SUSAN REYNOLDS v SECRETARY OF STATE FOR ENERGY & CLIMATE CHANGE (2010)

The claimant widow claimed damages from the defendant Secretary of State following the death of her husband  from mesothelioma caused by exposure to asbestos. Her late husband was a former employee of the National Coal Board who had died as a result of mesothelioma caused by exposure to asbestos during the late 1970s and early 1980s at his place of work.

The claimant widow called witnesses who had worked at the factory during the relevant period. They claimed that at all times before and after the work was done there were frequent showers of blue asbestos dust falling from the roof. However, air samples collected in 1976 and 1982 showed that the amount of asbestos dust in the workshop was well below the danger levels in force at the time and there was no record of any complaints in the consultative committee minutes.

An expert in health and safety stated that the evidence of the claimant’s witnesses was incompatible with the measurements taken and that he could not conceive how the events described by the witnesses could have taken place in light of the work done, even if there were some deficiencies in that work.

The court held that it could not rely on the evidence given by the witnesses. Furthermore, the expert's evidence was entirely convincing in relation to the accuracy of the sample measurements. The claimant had failed to establish that the board acted in breach of its statutory duty or its common law duty of care. The board had minimised the exposure to asbestos so far as was reasonably practicable according to the standards at the time. The claim was therefore dismissed.