CNA Insurance Company (Europe) Ltd v Servico International Ltd & Ors

Permission to raise a fundamentally new legal case on appeal will not ordinarily be extended where the point falls outside the permission previously granted and the litigation has proceeded on a different basis. A consensual account may be used to resolve the parties’ financial dispute, and a party who participated fully in that process cannot readily require a new damages inquiry. Mitigation arguments may be addressed within the account. The Court of Appeal may vary a stay of execution pending appeal and may admit further evidence in a concise, controlled form where that best serves the fair and manageable disposal of the appeal.

The proceedings concerned CNA’s claim for an account and payment of insurance premiums connected with contracts entered into by Servico. The first-instance judgment awarded CNA £10,982,000. Permission to appeal had previously been granted on specified issues, including usage days and the reasonable diligence required in collecting premiums.

Servico sought to enlarge the appeal to argue that CNA’s claim was one for damages for repudiatory breach, rather than a debt or account, and applied to adduce extensive further evidence. CNA sought judgment on admissions and resisted variation of the stay affecting enforcement of the first-instance judgment. The court had to determine the scope of permission, the appropriate basis for the stay, and the admissibility and management of further evidence.

1. Permission to appeal. Servico required permission to advance the new root-and-branch argument that CNA’s claim was a damages claim arising from repudiatory breach. The earlier permission, described as concerning reasonable diligence in collection, did not extend to that argument. The pleadings and conduct of the proceedings had proceeded on an account of premiums, not a developed damages analysis. Permission was therefore refused.
2. Account and mitigation. The account had been undertaken consensually with the joint involvement of the parties and PwC. Servico could not readily resile from that process and require CNA to undertake a lengthy assessment of damages. The complaint that CNA had failed to collect all collectable premiums could be considered as a challenge to the account. The amount claimed was based on premiums actually collected, so the distinction between debt and damages did not affect the figures for present purposes.
3. Stay of execution. The Court of Appeal had jurisdiction to vary a stay pending appeal. CNA’s application for judgment on admissions was treated as an application to vary the existing stay. The stay was reduced to £9,651,793.88, leaving the balance of the judgment enforceable.
4. Further evidence. Servico was permitted to adduce a concise summary of the evidence concerning its alleged ability to collect premiums and proposed collection arrangements. Further specified witness evidence was also admitted. The court considered the hurdle identified in Ladd v Marshall and the Civil Procedure Rules 1998, but exercised its discretion generously because the appeal already had permission on two grounds, concerned a substantial summary judgment, and could be made more manageable by limiting the material.

• Court of Appeal (Civil Division): On 26 April 2002 the court had dealt with the scope of permission to appeal and directed a separate notice concerning the Direct Car Finance issue. In the present judgment, permission was not extended to the new damages arguments, the stay was varied, and further evidence was admitted in limited form.
• High Court: Mr Justice Steel had entered judgment for CNA in the sum of £10,982,000, subject to the issues raised on appeal.