Jones v Environcom Ltd & Anor

A claim that a broker’s negligence caused a fire is legally distinct from a claim that negligence deprived an insured of cover for a fire that occurred. The former requires its own pleading of the relevant duty, breach, scope, causation and remoteness.

A new case on appeal should be permitted only where its late introduction cannot cause injustice because the necessary facts and evidence are already before the court. Permission to amend should ordinarily be refused where the amendment introduces a fundamentally new, fact-sensitive case that was not investigated at trial and would require a remission.

After a fire destroyed Environcom’s premises, the insurers avoided the policy for non-disclosure. Environcom settled with the insurers and continued proceedings against its insurance brokers, Miles Smith, alleging negligent advice concerning disclosure.

At trial, David Steel J found a breach of duty but no loss, holding that Environcom would not have obtained insurance on acceptable terms. On appeal, Environcom abandoned factual challenges to that conclusion and sought to advance a new alternative case that, if properly advised, it would have changed its working practices and avoided the fire. The central issue was whether that unpleaded case could be raised on appeal, with or without amendment.

Appeal dismissed. Rix LJ gave the reasons for the court’s decision, with which Hooper LJ and Sir Anthony May agreed. Permission to amend was refused.

1. The proposed no-fire claim required amendment. A claim that broker negligence caused the fire was different from the pleaded claim that negligence caused the loss of insurance cover for a fire that had occurred. It required a properly pleaded duty to advise or assist with risk-reduction measures, together with analysis of scope of duty, causation and remoteness. The proposed amendment did not reformulate the relevant duty or breach.
2. A new point not taken at trial may ordinarily be raised on appeal only where the court is satisfied that the complete factual material is before it and that no injustice can result from the omission. The principles were stated in Pittalis v Grant [1989] QB 605 (CA) and The Tasmania (1890) 15 App Cas 223, and revisited in Crane t/a Indigital Satelite Services v Sky In-home Limited [2008] EWCA Civ 978.
3. The proposed case was a complex, fact-sensitive issue of mixed fact and law. It had not been properly pleaded or investigated at trial. A successful appeal would require a remission and further consideration, including contributory negligence. Those circumstances demonstrated the risk of injustice and justified refusing permission.
4. The recent authorities on late amendments, including Worldwide Corporation Ltd v GPT Ltd [1998] EWCA Civ 1894, Savings & Investment Bank v Fincken [2003] EWCA Civ 1630 and Swain-Mason v Mills & Reeve [2011] EWCA Civ 14, supported refusal of an amendment introducing a fundamentally new case.
5. The court did not determine the substantive issues of scope of duty, causation or remoteness. Rix LJ observed that the judge’s reasoning on the merits appeared prima facie persuasive, but expressly stated that those observations were not part of the determination.

• Court of Appeal (Civil Division) — dismissed the appeal and refused permission to amend the pleading to introduce the unpleaded no-fire case.
• Queen’s Bench Division, Commercial Court — David Steel J found a breach of the broker’s duty to advise on disclosure but found that Environcom had suffered no recoverable loss: [2010] EWHC 759 (Comm).