The court considered the application of the limitation period to answering when damage occurred when it arises under an unsecured contingent liability. The claimant insurance company had provided after the event litigation insurance policies to the solicitors and their clients, relying on assessments of the cases made by the defendants. The court below had held that the taking out by the defendants of the policies was when the damage occurred.
Held: The claimant insurers’ appeal failed. The case law should not be read to put an unsecured creditor in a better position than a secured one. Analysis of Sephton led to the conclusion that: ‘there had to be measurable loss before time began to be run, that is to say, loss which is additional to the incurring of a purely contingent liability. In my judgment, for this purpose, rights of contribution or subrogation must be ignored because those rights arise by operation of law, unless excluded by agreement or statute. If they were taken into account, they would undermine the basic rule which is clearly established in Sephton that a pure contingent liability is not damage.’
A measurable loss arose on breaches of the vetting duties when the policies were issued, because the mis-assessment devalued the policies.
Judges:
Arden, Longmore, Lloyd LJJ
Citations:
[2009] EWCA Civ 1166, Times 15-Dec-2009, 127 Con LR 50, [2009] 2 CLC 793, [2010] PNLR 10, [2010] 1 WLR 1662
Links:
Statutes:
Jurisdiction:
England and Wales
Citing:
Appeal from – Axa Insurance Ltd v Akther and Darby Solicitors and Others ComC 27-Mar-2009
. .
Cited – Wardley Australia Ltd v Western Australia 1992
(High Court of Australia) A claim was based on a statutory trade indemnity scheme. The insurers claimed damages from Wardley, on the basis that its alleged deceit induced them to grant an indemnity, which was subsequently called on.
Held: . .
Cited – DW Moore and Co Ltd v Ferrier CA 1988
A solicitor was instructed to prepare an agreement providing for the introduction of a new working director into an insurance broking business carried on by a company. His instructions called for the new director to enter into a restrictive covenant . .
Cited – Shore v Sedgwick Financial Services Ltd CA 23-Jul-2008
The claimant said that the defendant had given him negligent advice on pensions, failing to say that he should stay within his occupational scheme. The defendant pleaded limitation.
Held: The claimant suffered damage when he made the transfer . .
Cited – Watkins and Another v Jones Maidment Wilson (A Firm) CA 4-Mar-2008
The claimants alleged professional negligence by the defendant solicitors in advising them to agree to a postponment of a completion. The defendants raised as a preliminary issue the question of limitation. The claimant said that the limitation . .
Cited – Law Society v Sephton and Co (a Firm) and Others HL 10-May-2006
A firm of solicitors had a member involved in a substantial fraud. The defendant firm of accountants certified the firm’s accounts. There were later many calls upon the compensation fund operated by the claimants, who sought recovery in turn from . .
Cited – Bell v Peter Browne and Co CA 1990
Mr Bell asked his solicitors to transfer the matrimonial home into his wife’s sole name. He was to receive a one-sixth interest of the gross proceeds on a sale. His interests were to be protected by a trust deed or mortgage. The solicitor drafted . .
Cited – First National Comercial Bank plc v Humberts CA 27-Jan-1995
The plaintiff loaned money on the basis of a negligent survey by the defendant. The borrower subsequently defaulted, and the lender issued a writ. The defendant said that the claim was time barred.
Held: The court allowed the plaintiff’s . .
Lists of cited by and citing cases may be incomplete.
Limitation, Insurance, Professional Negligence
Updated: 06 December 2022; Ref: scu.377883
