R+Versicherung AG v Risk Insurance and Reinsurance Solutions SA & Ors

Costs incurred by a claimant in investigating and mitigating a conspiracy may be recovered where they are sufficiently attributable to the tort and the evidence establishes the expenditure with reasonable particularity. Significant diversion of staff from ordinary activities is sufficient; proof of lost business, reduced profit or additional expenditure is unnecessary.

Recoverable costs may include investigation before the wrongdoing is fully discovered, investigation of the wider relationship affected by the conspiracy, and subsequent run-off work. Profits from the impugned business are not to be set off against those mitigation costs where the profits are unrelated to the need to investigate the wrongdoing.

Contractual fee machinery should be given practical effect where its intended operation can be ascertained. Criminal contempt jurisdiction does not ordinarily extend to acts committed abroad by foreign persons or corporations.

The claimant had previously obtained judgment on liability for conspiracy. Earlier judgments had also determined issues of principle concerning quantum. This judgment addressed the quantification of staff, management and external-contractor costs, a proposed profit set-off, fees payable under an insurance binder, indemnity arising from an allegedly unauthorised quota-share treaty, ownership of monies in London bank accounts, and applications alleging contempt of court.

The central issues included whether the claimant had proved investigation and run-off costs with sufficient particularity, whether profits could reduce those costs, how the binder’s fee formula should operate, whether declarations could be granted without deciding whether the claimant was bound by the quota-share treaty, and whether the court had jurisdiction over alleged criminal contempt committed abroad.

1. Investigation and mitigation costs. The claimant had sufficiently proved its claim for management, staff and external-contractor costs. The relevant inquiry was whether the work was sufficiently attributable to investigating or mitigating the conspiracy and whether staff had been significantly diverted from their usual activities. Lost business, lost profit and additional expenditure were not prerequisites. The required degree of certainty and particularity depended on the nature of the wrongdoing, consistent with Ratcliffe v Evans (1892) 2 QB 524, Lonhro Plc v Fayed (No. 5) [1993] 1 WLR 1489 and Standard Chartered Bank v Pakistan Shipping 2001 EWCA Civ 55.
2. Recoverable work included investigation before discovery of the concealed addenda, investigation of the relationship with Risk as a whole, and run-off of cancelled or non-renewed business, including claims handling and other work otherwise performed by Risk. The court excluded the identified period of a consultant’s work that could not reliably be separated from litigation support.
3. The proposed set-off of profits from the impugned business was unavailable procedurally and was in any event bad in law. The costs were mitigation expenses caused by the conspiracy and its concealment. The profitability of the business was unrelated to the need to incur those costs.
4. ING binder. The fee clause was intelligible by reference to the projected expense ratio. “Premiums” meant gross written premiums, and the appropriate ratio was expenses to estimated gross written premiums. Risk was therefore entitled to fees of 6.53 per cent of gross written premium.
5. Quota-share treaty. The court could not determine whether the claimant was bound to the treaty. Nevertheless, because Risk had acted without authority, the claimant was entitled to declarations requiring indemnification for sums payable under the treaty and for sums received by Risk and not paid to the claimant.
6. London accounts. All monies in the HAT accounts were trust money. Risk had no beneficial interest. The binder provisions gave Risk a contractual entitlement to draw commission, but supplied no mechanism by which trust money ceased to be trust money. Declarations were granted, subject to protecting ING’s possible interest.
7. Contempt. The applications were criminal in substance because they sought punishment for alleged interference with the course of justice, rather than enforcement of an order. The alleged acts occurred abroad and were attributed to foreign persons or a foreign corporation. The court therefore lacked jurisdiction to punish them as contempt. Risk’s application was struck out.

This was a first-instance decision in continuing proceedings. The judgment records earlier liability and quantum judgments by Moore-Bick J and Gloster J, but no appellate decision is stated.