Supreme Court considers loss of a chance in professional negligence claim

In Perry v Raleys Solicitors [2019] UKSC 5, the Supreme Court considered a professional negligence claim against a firm of solicitors arising out of advice they had given an individual in connection with his claim against the National Coal Board (later British Coal) for Vibration White Finger (VWF).

Lord Briggs (with whom the rest of the Supreme Court panel agreed) restated the approach to causation which was set down in Allied Maples v Simmons & Simmons (a firm) [1995] 1 WLR 1602, namely that in cases where a claimant alleges that a breach of duty caused him to lose an opportunity: (1) the claimant must prove what he would have done on the balance of probabilities; (2) when looking at what a third party might have done, the court undertakes a loss of a chance analysis.

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Coverage for ‘Doomsday or Armageddon’ data breach class actions: insurance implications of the Court of Appeal’s decision to confirm Morrisons’ vicarious liability for employee’s deliberate actions

In the recent judgment in Wm Morrisons Supermarkets Plc v Various Claimants [2018] EWCA Civ 233 the Court of Appeal has dismissed an appeal against the High Court’s decision that Morrisons was vicariously liable for its employee’s misuse of data, despite: (i) Morrisons having done as much as it reasonably could to prevent the misuse; and (ii) the employee’s intention being to cause reputational or financial damage to Morrisons itself. It is understood that Morrisons intends to appeal to the Supreme Court. Our full analysis of the Court of Appeal’s decision can be found here.

Companies now find themselves exposed to potential UK data breach class action claims, including for distress-based damages, based on vicarious liability, even if they have appropriate safeguards in place and even if they are the intended victim of the breach. Day by day businesses find themselves responsible for higher volumes of personal data; and the risk of data breach claims is exacerbated by the legislative changes made by the GDPR, increasing public awareness of data protection issues and the publicity that this case has attracted. In addition, the facts of Morrisons were such that the company had been found not to be in breach of data protection laws. Future class action claims may be even easier to launch in circumstances where a company has been found to breach the GDPR, for example, by not having appropriate security measures in place. It is understood that Morrisons intends to appeal to the Supreme Court.

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Brokers’ negligence – guidance on the scope of the duty and causation

In Dalamd Limited v Butterworth Spengler Commercial Limited [2018] EWHC 2558 (Comm), Mr Justice Butcher considered a negligence claim against the Defendant insurance broker arising out of a fire at a waste recycling facility. The insured’s claim succeeded in part.

In his decision, the Judge provided a useful recap on brokers’ duties, in particular their duty to advise clients on their pre-inception duties of disclosure. Of particular note, he also considered how causation should be analysed in brokers’ negligence cases where the insured has not pursued the claim against its insurer to settlement, judgment or award. His conclusion – which will be well received by brokers – was that whether a good defence to the policy claim was available to an insurer will be assessed on the balance of probabilities (i.e. a yes/no basis), and not a loss of a chance basis. Whether there was another defence available to the insurer, for which the broker was not responsible, will likewise be assessed on the balance of probabilities, although the issue of whether the insurer would have pursued that point is to be assessed based on loss of chance.

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HIGH COURT RULES THAT BROKER WAS NOT IN BREACH OF DUTY IN FAILING TO PROVIDE ORAL ADVICE IN RELATION TO THE DUTY TO DISCLOSE

In holding that a broker was not in breach of duty by failing to give oral advice in relation to the disclosure of criminal convictions the Court has provided a useful reminder of the extent of a broker’s duty to advise in relation to disclosure. The Court also held that a lack of expert evidence materially limited, but did not exclude, the possibility of a finding that the broker breached its duty to act with reasonable care and skill.

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CAUSATION IN VALUERS’ NEGLIGENCE CLAIMS: RELIANCE ON EARLIER VALUATIONS

In a decision that will be of interest to  professional indemnity insurers as well as financial institutions and valuers, the Supreme Court has overturned a decision of the Court of Appeal and found in favour of the Defendant valuer in a professional negligence claim.

The Supreme Court, in Tiuta International Ltd (in liquidation) v De Villiers Surveyors Ltd [2017] UKSC 77, held that where a lender advanced money on the basis of an initial valuation, then refinanced the facility (effectively repaying and replacing the original loan) on the basis of a second negligent valuation, the liability of the negligent valuer was limited to the ‘top up’ element of any additional lending. The valuer was not liable for the whole loss attributable to the entire amount of the second loan. Continue reading

CONSTRUCTION OF EXCLUSIONS IN INSURANCE POLICIES

In Crowden and Crowden v QBE Insurance (Europe) Ltd [2017] EWHC 2597 (Comm) the Commercial Court found in favour of the Defendant insurer on the disputed construction of an “insolvency” exclusion in a professional indemnity insurance policy.  The case is a useful reminder of the approach which the English Courts take to the construction of exclusions in insurance contracts. Continue reading

Court of Appeal considers trigger for liability coverage when settlement is agreed by payment of monies into escrow account

In (1) WR Berkley Insurance (Europe) Limited and (2) Aspen Insurance UK Limited v Teal Assurance Company Limited [2017] EWCA Civ 25, a defendant in a construction dispute settled the dispute and paid a sum into an escrow account from which the claimant could, under certain circumstances, draw down sums to pay for remedial works. At that stage was the liability ascertained? The Court of Appeal held that the defendant's liability under the settlement agreement was quantified (and the defendant was accordingly entitled to claim an indemnity under its professional indemnity policy) only when the claimant drew down sums from the escrow account, not when the defendant paid the sum into the account.

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Reminder to brokers of the need to advise insureds on policy terms

In RR Securities Ltd v Towergate Underwriting Group Ltd [2016] the Court held a broker liable for failing to advise its insured client that certain safety precautions were required by insurers as a condition precedent to cover under a property policy.  The case serves as a reminder to brokers of the importance of advising clients on the terms of the policies they place, particularly onerous terms such as conditions precedent.

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High Court construes wording as aggregating language to give effect to limit of liability

In Spire Healthcare Limited v Royal & Sun Alliance Insurance Plc [2016] EWHC 3278 (Comm), the High Court considered the wording of a clause in an insurance policy and was prepared to interpret the clause as an aggregating clause. Although aggregating provisions are normally worded so as to aggregate claims both for the purposes of the insured's excess and the insurer's limit of indemnity, the Court was not prepared to "rewrite" the policy to achieve this effect here. The aggregating provision applied only to the limit of indemnity.

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Court of Appeal construes aggregation provision in minimum terms and conditions of professional indemnity insurance

The Court of Appeal has varied the decision of the High Court in AIG Europe Limited v OC320301 LLP and Others [2015] EWHC 2398 (Comm) and provided further guidance on the construction of the aggregation clause contained in the Minimum Terms and Conditions of Professional Indemnity Insurance (as published by the Solicitors' Regulation Authority) required to be incorporated into compulsory liability insurance for solicitors. At the first instance decision, Teare J held that, in order to form a "series of related matters or transactions", the relevant transactions had to be dependent on each other. The Court of Appeal held that the appropriate test was whether the transactions had an intrinsic relationship with each other, not an extrinsic relationship with a third factor. The case has been remitted to the Commercial Court to be determined on the facts in accordance with the guidance given by the Court of Appeal.

Tom Leech QC, of the Herbert Smith Freehills advocacy unit, appeared for the Trustees.

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