Skylight Maritime SA v Ascot Underwriting Ltd. & Ors

A solicitor who conducts litigation without the authority of the apparent client may be ordered summarily to compensate the opposing party for recoverable loss caused by the unauthorised conduct. The jurisdiction is supervisory but compensatory, not punitive. Summary determination is appropriate where lack of authority and loss are clear. Where material issues of fact or law remain, the opposing party should bring separate proceedings for breach of warranty of authority. Damages cannot place the claimant in a better position than if the authority had existed. Accordingly, the ordinary measure is the costs that would have been recoverable from the supposed client, subject to proof that those costs represent an actual recoverable loss.

Skylight Maritime commenced proceedings against insurers concerning the alleged total loss of its yacht. Its solicitors, Jackson Parton, later joined Houlder Insurance Services (Marine) Ltd as a third defendant, alleging breaches of duty as placing brokers.

The insurers’ claim was struck out because Skylight had not authorised the proceedings. Houlder then applied for a summary order requiring Jackson Parton to pay its indemnity costs, alleging that the solicitors had lacked authority to commence and pursue the claim. The application raised disputed questions concerning beneficial ownership of Skylight, the authority of its purported owner and broker, the scope of the solicitors’ instructions, Panamanian law, and whether Houlder had suffered recoverable loss.

1. Application refused. Houlder was left to commence separate proceedings against Jackson Parton for breach of warranty of authority.
2. The court has a summary jurisdiction to order a solicitor who acts without the authority of an apparent client to compensate the opposing party for loss caused by that conduct. The jurisdiction arises from the solicitor’s status as an officer of the court and the implied representation that the solicitor is authorised to act.
3. The jurisdiction is compensatory rather than punitive. Proof of loss is essential. The usual measure is the benefit lost by reason of the supposed client not being a party to the proceedings, ordinarily the costs which would have been recoverable from that client.
4. Where the facts and law are clear, summary determination may be appropriate. Where there are real issues concerning authority, causation or recoverable loss, the matter should be determined in ordinary proceedings for breach of warranty of authority.
5. The evidence suggested that Mr Sigalas might have acquired beneficial ownership of Skylight and might have authorised proceedings against the insurers. However, it was unclear whether he could bind the company without authority from its directors, whether authority had been given to Inship, and whether any authority extended to joining Houlder after Mr Sigalas’s death.
6. There were also unresolved questions concerning the hypothetical costs position. Skylight apparently had no assets after its claim against the insurers was struck out, and it was unclear whether Houlder could establish that it would have recovered costs from Skylight had the warranty been true. These issues required evidence of Panamanian law and potentially further documentary evidence.