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

A party may be prevented from raising a new case at a later remedies hearing where it could and should have been advanced at the liability trial. The court must assess abuse of process broadly and on the merits, having regard to finality, efficiency, fairness and the circumstances as a whole. Where dishonest conduct has already been found to have caused a specified deduction, a defendant cannot subsequently rely on ratification or alleged contractual entitlement to require the claimant to re-prove that loss, where that position contradicts the way the case was fought. Wasted employee time spent investigating or mitigating a tort is recoverable in principle without proof of lost profit, provided the time and its direct attribution to the wrong are proved with sufficient certainty. Contractual fees depend on the proper construction of the agreement and ordinary business sense.

This was a hearing of issues of principle concerning the quantum and remedies following an earlier liability judgment in favour of R+V. R+V had appointed Risk as an intermediary under binding authorities for reinsurance business. Unauthorised addenda provided for an additional 40% commission deduction. The earlier judge found dishonest conspiracy, breach of duty and entitlement to damages, leaving the precise remedies and quantum for later determination.

The issues included whether Risk could rely on ratification, severability and contractual entitlement to reduce recovery of the 40% deduction; the construction of claims-handling and profit-commission provisions; treatment of French property premiums; and recovery of internal management and staff time and overheads.

1. Ratification and abuse of process. Risk was precluded from arguing at the remedies stage that ratification of the Addenda, their alleged unity with the Binders, or contractual entitlement to the deduction reduced R+V’s damages. The point should have been raised at the liability trial. Risk had conducted the case on the basis that, if dishonesty were proved, the 40% deduction was recoverable as damages for conspiracy. Reopening the issue would substantially relitigate matters already addressed and would be an abuse of process. There was also an effective estoppel by representation and reliance. The strict requirements of res judicata or issue estoppel were not necessary to establish abuse.
2. The account was therefore to require repayment of the 40% deduction received by Risk, with no further credit for equivalent deductions. Issues concerning whether the Addenda were separate agreements, whether they were ratified, and certain alternative remedies were not decided.
3. The 1% claims fee was a fee for handling claims. It was not payable merely because Risk had written the business where it had not handled or paid the claims.
4. The word commissions in the profit-commission formula included Risk’s 8%, 2% and applicable 1% fees. Those sums had to be deducted before calculating the 25% profit commission. No deduction for the 40% commission was required because R+V had not ultimately borne it.
5. Risk had to account for the full French property premiums routed through the SHTTL Binder. Any entitlement to French commissions had to be pursued in other proceedings.
6. External consultants’ or experts’ costs were recoverable in principle, subject to causation, remoteness, reasonableness and litigation-related issues. Wasted internal staff time spent investigating or mitigating the conspiracy was also recoverable in principle without proof of lost profit or additional expenditure. R+V had to prove with sufficient particularity that the time was directly attributable to the tort and caused significant diversion or disruption. Additional staff costs for handling claims were recoverable subject to credit for claim fees that would otherwise have been payable.

The judgment records an earlier liability trial before Moore-Bick J, at which judgment was given for R+V and damages and remedies were left for later determination. This judgment determined preliminary quantum and remedies issues before the final remedies hearing.